LONDON: British consumers are more concerned about rising living costs than the consequences of Brexit, or the UK's departure from the European Union, according to a new report that finds this surprising since the two issues are interlinked.
Based on a poll of 2,000 people, HSBC’s Anatomy of the Consumer report revealed that growing inflation is the top concern for half (49.3%) of UK consumers, followed by health issues (44.5%), terrorism (35.8%) and the effects of Brexit (32.1%).
Analysts at the international bank said they were surprised to see there was such a disparity between concerns related to rising inflation and Brexit.
"We find this intriguing because the two are interlinked in our view, with rising living costs being at least partly a function of the Brexit vote," they said in the report.
"What is striking to us, from the list of concerns, is that while 32% of people said they were worried about the effects of Brexit, the second least concerning thing on the list of options was job security, with just 15.5% of people checking this box. All in all, the survey suggests consumer confidence is still pretty robust."
In terms of what this might mean for household spending in 2017, around a quarter (26%) of consumers say they plan to save more while 38.4% will save about the same as last year.
But if consumers do cut back on spending, the sectors most likely to be hit are eating out (30%), holidays (19%), drinking out (15%), clothing and footwear (12.9%), home improvements (10%) and entertainment (9%).
"If people do cut back on spending in these areas, this could be the beginning of a vicious circle for the UK," the report warned, in reference to the UK service sector employing 80% of the country's workforce.
HSBC's comprehensive survey also explored UK consumer attitudes towards a wide range of sectors and brands, and the bank used the results to make buy or sell stock recommendations.
Among the findings, British Airways emerges as the UK's favourite airline, although easyJet is preferred when prices are cheaper. Meanwhile, Hilton is the UK's favourite upmarket hotel brand, while Premier Inn is most popular among budget hotels.
The report also revealed that Costa, the Whitbread-owned coffee chain, is visited three times more than Starbucks, that Stella Artois is the most preferred beer, and almost two-thirds (61.7%) of consumers cite Tesco in their top three supermarkets.
Data sourced from HSBC; additional content by Warc staff