The economic effects of Brexit: evidence from the stock market
Holger Breinlich, Elsa Leromain, Dennis Novy, Thomas Sampson and Ahmed Usman
We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investorsi?? expectations about the effects of leaving theEuropean Union on the UK economy. Our results suggest that initial stockprice movements were driven by fears of a cyclical downturn and by thesterling depreciation following the referendum. We also ?nd tentative evidencethat market reactions to two subsequent speeches by Theresa May (her Conservative party conference and Lancaster House speeches) were moreclosely correlated with potential changes to tariffs and non-tariff barriers on UKi??EU trade, indicating that investors may have updated their expectations inlight of the possibility of a i??hard Brexiti??. We do not ?nd a correlation between the share of EU immigrants in different industries and stock market returns.
1 December 2018
Fiscal Studies 39(4) , pp.581-623, 2018
This Journal article is published under the centre's Trade programme.
This publication comes under the following theme: Brexit