Brexit, the British economy and consumption
It is argued that leaving the European Union would damage property markets and the macro-economy, resulting in lower consumption.
Based on our analysis in sections 1 to 6, we are, on balance, sceptical of the more extreme claims made about the costs and benefits of Brexit for the British economy. It is plausible that Brexit could have a modest negative impact on growth and job creation. However it is slightly more plausible that the net impact would be modestly positive. There are potential net benefits in the areas of a more tailored immigration policy, the freedom to make trade deals, moderately lower levels of regulation and savings to the public purse. In each of these areas, we do not believe that benefits of Brexit would be huge but they are likely to be positive. Meanwhile, costs in terms of financial services and foreign direct investment are more likely to be short-term and there are longer-term opportunities from Brexit even in these areas. In this chapter, we have seen that that there may be a limited impact on the level of occupier demand for property, mainly via the City of London channel.
Overall, the resultant effects on consumption could well be positive and are certainly not likely to be large. We continue to think that the United Kingdom’s economic prospects are good whether inside or outside the European Union. Britain has pulled ahead of the European Union in recent years, and we expect that gap to widen over the next few. (See Figure 31.)