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Journal article
The Economic Effects of Brexit: Evidence from the Stock Market
Holger Breinlich, Elsa Leromain, Dennis Novy, Thomas Sampson and Ahmed Usman December 2018

Fiscal Studies 39(4), 2018
DOI: 10.1111/1475-5890.12175

Tags: brexit; depreciation; event study; recession; stock market; tariffs;

We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors’ 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 UK–EU trade, indicating that investors may have updated their expectations inlight of the possibility of a ‘hard Brexit’. We do not ?nd a correlation between the share of EU immigrants in different industries and stock market returns.

DOI: 10.1111/1475-5890.12175