Question Luke Business & Management

The Rise of Retail Spending in the UK Despite an Initial Sharp Dip Since Brexit

Why might the level of retail spending in the UK have continued to rise despite an initial sharp dip since the Brexit vote in July?

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Answer Expert #27321

Although the UK’s decision to leave the European Union in July (2016) provided an initial shock wave throughout the country, consumer spending to September showed a 1.6% increase (Elliot, 2016). One reason for this could be due to current trends in the UK such as wage rises, low unemployment and low borrowing costs. However, it could be said that British consumers are currently wary of spending money on luxury goods, and more likely to be spending on inferior goods for fear of recession in the future.

Given this explanation, it can be speculated that perhaps a reason for this rise in retail spending within the UK could be coming from consumers who are based outside of the UK for most of the time. One of the post-Brexit effects witnessed was a sharp fall in the pound on the exchange rate, meaning that tourists can get a greater amount of pounds in exchange for their own currency. Thus, tourists from areas such as China are likely to choose the UK as a travel destination over alternative European destinations, as they can purchase luxury items from Britain, but at a cheaper price due to an improved rate of exchange (Allen, 2016).

Furthermore, the weakness of the pound in the exchange market may further have worked as a tool to keep British money within the UK, due to the increased cost of exchanging pounds for alternate currencies. This may have encouraged further spending on goods or domestic holidays, thus causing a rise in the retail spending of the UK post-Brexit.


Allen, K. (2016) ‘UK Shops look to Chinese Tourists for a golden week on the tills.’ The Guardian [Online] 2 October [Accessed on 6 October 2016]

Elliot, L. (2016) ‘What Brexit effect? Why British consumers still spend, spend, spend.’ The Guardian. [Online] 15 September [Accessed on 6 October 2016]