Great or grim? Disagreement about Brexit, economic expectations and household spending

Does political polarization influence economic expectations and behaviour? Utilizing British household surveys and administrative data, we find a strong polarization of economic expectations and behaviour between pro- and anti-Brexit supporters after the once-in-alifetime EU Referendum. We show that the Brexit vote led to a large and long-lasting divergence between Leavers and Remainers in their assessment of the general economic situation, personal circumstances, and spending intentions. Furthermore, on average, a 10% difference in the share of leave voters across local authorities is respectively associated with a 5.98% and 0.78% increase in the gap in the per capita housing transaction volume and licensed automobile stock after the referendum.