Brexit?

The twenty-third of June 2016 is a watershed in recent British history, the day on which the electorate of the United Kingdom voted, by a majority of 52 per cent to 48 per cent, for their government to take steps to leave the European Union. The result of the referendum has variously been described as a new dawn for the UK, as an expression of protest against the government and its policies and as an act of economic and political self-harm, according to the commentator’s point of view.

Most people expected the result of the referendum to be a vote in favour of remaining in the EU and there has been turmoil in the markets and confusion and chaos in British domestic politics. As expected, the value of the British currency has declined in the immediate aftermath of the referendum result and investors have turned to safe havens such as gold and government securities. These are the classic textbook effects that any well-educated student of economics might have predicted.