Brexit and Leisure Spending…

June 30 2016

Britain has voted 52:48 to leave the EU.

  • Despite the likelihood it was a protest vote gone wrong, Britain has voted to leave the EU
  • ‘Democracy must be served’ say hard-core Brexiters, Juncker & anti-UK nutters in Brussels
  • But for the moment, nothing – other than the vote – has happened.
  • Article 50 may be invoked sooner (no), later (maybe) or never (also, maybe).
  • In the meantime, uncertainty overhangs the UK economy, consumers, etc.

Current situation:

  • Will Article 50 be invoked, will Labour jettison Corbyn, who will the next PM be?
  • We don’t know how Europe will respond, what Sterling will do, how the economy will react.
  • Asset prices may fall. Jobs may be lost & the only certainty is uncertainty.
  • Still we are where we are but the Brexiters appear to have no plan

Possible time-line:

  • All of the above is not consistent with steady, consistent leisure spending
  • Indeed, it’s not even clear, given the Fixed Term Act, if we can call a General Election.
  • In the face of uncertainty, consumers are likely to sit on their hands, reduce their spending

Small ticket spending could/should hold up:

  • Uncertainty and parsimony are positively correlated. Consumers may sit on their hands.
  • But this may be more of an issue for large rather than small ticket items.
  • Deferring big purchases (cars, houses, furniture, white goods) is just that – it’s a deferral
  • Lifestyles don’t change if you stick with the old clunker but foregoing the odd beer is a pain
  • Unless jobs are lost in size, small ticket leisure companies’ sales will hold up reasonably well

When will we know?

  • Very hard to say but July should be a ‘normal’ month (no Easter shift, half term shift, football)
  • Given similar weather, comparing 2016 with 2015 should be like-for-like
  • July starts on Friday & we will be very interested to hear how trading goes
  • FYI this week in 2015 was the hottest of the year. The summer was rubbish thereafter.