Brexit, economic confidence and the steady erosion of the middle ground

We’ve just published our Economic Outlook report. As always, there’s lots of interesting and surprising data in the report. The headline finding is that despite the political chaos at the moment, consumer confidence is holding up pretty well.

It really seems as if the endless arguments over our future relationship with the EU have now been dragging on for so long that most people have given up on trying to work out what it’ll mean for their household finances.

Instead, they’re focussing on more concrete factors. Low inflation and interest rates, rising real wages, and continued low unemployment mean that 31% of UK consumers say they’re better off today than they were a year ago; meanwhile, 21% say their finances have deteriorated over the last 12 months.

Consumer views on Brexit’s impact on the economy are polarising

Maybe the most interesting angle, though, is the increasing polarisation among consumers.

Commentators (myself included) are watching the political machinations, and finding it harder and harder to work out how it’s all going to stack up.

But while we’re scratching our heads, consumers are climbing down off the fence and taking sides.

That’s nothing new when it comes to politics; society is already divided there, and now it seems there is no middle ground left on Brexit. What’s new is that this polarisation is creeping into the economics as well.

We ask about a range of economic factors from broad issues (ie economic growth) to personal issues (ie career prospects) and there’s been a noticeable decline in the proportion of people who don’t think Brexit will have much of an impact either way.

For the first time since the referendum, for example, more than half think that Brexit will have an impact on their household income; whereas in the past, most thought that it wouldn’t directly affect them.

What’s even more striking is that this isn’t because of a general shift in opinions towards one side of the debate. It’s because, as the debate drags on, the middle ground is disappearing. People agree that Brexit will have an impact on their finances and on the economy as a whole – they just can’t agree whether it’ll be positive or negative.

A polarised country will make marketers’ job much harder

Given the impact that Brexit will have on our economy, our politics and our society, it sometimes feels a bit frivolous to tie it back to what it means to marketers (or to market researchers).

But this polarisation will present huge challenges to brands. In a divided country, how do you create a message with wide appeal, without ending up creating something so bland that no one notices it?

The culture wars in the US show just how easy it is for one piece of tone-deaf messaging to inadvertently prompt damaging consumer backlash.

Nike has shown that it’s possible for smart marketers to succeed by playing up to this divide. But without near-perfect execution, this is a very risky approach – as demonstrated by the experience of other brands who have attempted the same trick but fallen flat on their faces.

Brands need to understand where their customers sit on the Brexit divide

From conversations with colleagues in Mintel’s US offices, I don’t think the divide runs quite as deep on this side of the Atlantic. But as the political debate around Brexit becomes more and more heated, I can only see a continuation of this polarisation in the UK.

In particular, if Brexit does lead to an economic slowdown, then the issue will become even more toxic, with each side desperate to pin the blame on their opponents.

It’s going to be more important than ever to understand where your customers sit. Needless to say, that’s where market insight comes in. We’ve got fresh research in the field at the moment, trying to understand how the latest political turmoil has affected consumer confidence, and whether it’s affecting shoppers’ plans. So watch this space.

We’ve also got decades’ worth of data and insight across hundreds of different consumer-facing markets. What’s happening now is different to anything that the UK has seen before – but that doesn’t mean that we can’t learn from history, and what has happened at other periods of economic and political flux.