The Economic Effects of Brexit: Evidence from the Stock Market

Holger Breinlich, Elsa Leromain, Dennis Novy, Thomas Sampson, Ahmed Usman

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39 Citations (Scopus)
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We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors’ expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also find tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non-tariff barriers on UK–EU trade, indicating that investors may have updated their expectations in light of the possibility of a ‘hard Brexit’. We do not find a correlation between the share of EU immigrants in different industries and stock market returns.
Original languageEnglish
Pages (from-to)581-623
Number of pages43
JournalFiscal Studies
Issue number4
Publication statusPublished - 18 Dec 2018
Externally publishedYes

Bibliographical note

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.


  • Brexit
  • depreciation
  • event study
  • recession
  • stock market
  • tariffs
  • F15
  • F23
  • G14


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