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

Pei Kuang, Davide Luca, Zhiwu Wei and Yao Yao

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

Keywords: expectations; spending; housing; auto purchase (search for similar items in EconPapers)
JEL-codes: D84 E66 P16 R21 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2023-05-01
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119200

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