Cost-Cutting Families Are Feeling the Pinch Post-Brexit
Post-Brexit Britain is still feeling the effects of the decision to leave the EU. Cuts to household spending are at a two year high as consumers struggle with confidence in the economy. With a degree of uncertainty about Britain’s future and the strength of the economy without the support of the EU, many families are resorting to cost-cutting measures.
Fears for the economy are so great that around 45% of people in the UK believe that we are on the brink of another recession. Following the events of the 2008 financial crash, are people right to be worried? So far since Brexit negotiations began, the Pound has already dropped in value next to the Euro and Dollar. This has led to worries of a repeat of the credit crunch. And, ultimately, it has led to concerned families tightening their purse strings.
Currently, inflation is running at over 2.5%. This may not seem like a huge amount, but it is when wages are not rising in line with it. This means that everyday items are becoming more expensive, even though we are being paid less. As inflation is above real wage growth, household disposable income is being stretched to its limits. With over half of Britons admitting they take cost-cutting measures to reduce their spending on groceries and energy bills, it seems that society is anxious another recession will happen.
Though the country voted for Brexit, it seems as though it is now unsure of the effect it will have. Especially on the economy. Prior to the vote, the UK was the second most confident country in Europe. Now, post-Brexit, the UK has slipped to ninth place. According to experts, shopping behaviours are “changing in a way that is reminiscent of the aftermath of the financial crisis in 2008/9.”
The dominant area for cutting back on household spending is at the supermarket. Families are switching to more affordable brands or moving to cheaper super markets. These small everyday changes are where people believe they will save the most money. On the contrary, though, many families are still using their disposable income on holidays and activities. This suggests that the money they save from scrimping on everyday essentials, then means they have more to spend on luxuries.