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Great or grim? Disagreement about Brexit, economic expectations and household spending

Author

Listed:
  • Kuang, Pei
  • Luca, Davide
  • Wei, Zhiwu
  • Yao, Yao

Abstract

Does political polarization influence economic expectations and behaviour? Utilizing British household surveys and administrative data, we find a strong polarization of economic expectations and behaviour between pro- and anti-Brexit supporters after the once-in-alifetime EU Referendum. We show that the Brexit vote led to a large and long-lasting divergence between Leavers and Remainers in their assessment of the general economic situation, personal circumstances, and spending intentions. Furthermore, on average, a 10% difference in the share of leave voters across local authorities is respectively associated with a 5.98% and 0.78% increase in the gap in the per capita housing transaction volume and licensed automobile stock after the referendum.

Suggested Citation

  • Kuang, Pei & Luca, Davide & Wei, Zhiwu & Yao, Yao, 2023. "Great or grim? Disagreement about Brexit, economic expectations and household spending," LSE Research Online Documents on Economics 119200, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:119200
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    File URL: http://eprints.lse.ac.uk/119200/
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    References listed on IDEAS

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    More about this item

    Keywords

    expectations; spending; housing; auto purchase;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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