Economic effects of Brexit#Immediate impact of the referendum

According to one study, the referendum result had pushed up UK inflation by 1.7 percentage points in 2017, leading to an annual cost of £404 for the average British household.{{cite web|url=http://voxeu.org/article/consequences-brexit-uk-inflation-and-living-standards-first-evidence|title=The consequences of the Brexit vote for UK inflation and living standards: First evidence|last1=Breinlich|first1=Holger|last2=Leromain|first2=Elsa|date=20 November 2017|website=VoxEU.org|access-date=21 November 2017|last3=Novy|first3=Dennis|last4=Sampson|first4=Thomas}} Studies published in 2018 estimated that the economic costs of the Brexit vote were 2% of GDP,{{cite web|url=https://voxeu.org/article/300-million-week-output-cost-brexit-vote|title=£350 million a week: The output cost of the Brexit vote|last1=Born|first1=Benjamin|last2=Müller|first2=Gernot|date=30 September 2018|website=VoxEU.org|access-date=1 October 2018|last3=Schularick|first3=Moritz|last4=Sedláček|first4=Petr}}{{cite web|url=http://voxeu.org/article/300-million-week-output-cost-brexit-vote|title=£300 million a week: The output cost of the Brexit vote|last1=Born|first1=Benjamin|last2=Müller|first2=Gernot|date=28 November 2017|website=VoxEU.org|access-date=28 November 2017|last3=Schularick|first3=Moritz|last4=Sedláček|first4=Petr}}{{cite web|url=https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12454|title=Centre for Economic Policy Research|website=cepr.org|date=22 November 2017 |access-date=28 November 2017}} or 2.5% of GDP.{{cite web|url=https://www.theguardian.com/politics/2018/sep/29/britain-bill-brexit-hits-500-million-pounds-a-week|title=Britain's bill for Brexit hits £500m a week – and rising|last1=Savage|first1=Michael|last2=McKie|first2=Robin|date=29 September 2018|website=the Guardian|language=en|access-date=29 September 2018}} According to a December 2017 Financial Times analysis, the Brexit referendum results had reduced national British income by 0.6% and 1.3%.{{cite web|url=https://www.ft.com/content/e3b29230-db5f-11e7-a039-c64b1c09b482|title=The real price of Brexit begins to emerge|last=Giles|first=Chris|date=18 December 2017|website=Financial Times|access-date=19 December 2017}} A 2018 analysis by Stanford University and Nottingham University economists estimated that uncertainty around Brexit reduced investment by businesses by approximately 6 percentage points and caused an employment reduction by 1.5 percentage points.{{cite web|url=https://voxeu.org/article/rising-brexit-uncertainty-has-reduced-investment-and-employment|title=Rising Brexit uncertainty has reduced investment and employment|last1=Bloom|first1=Nicholas|last2=Chen|first2=Scarlet|date=16 November 2018|website=VoxEU.org|access-date=20 November 2018|last3=Mizen|first3=Paul}} A number of studies found that Brexit-induced uncertainty about the UK's future trade policy reduced British international trade from June 2016 onwards.{{cite web|url=https://voxeu.org/article/impact-brexit-uncertainty-uk-exports|title=The impact of Brexit uncertainty on UK exports|last1=Crowley|first1=Meredith|last2=Exton|first2=Oliver|date=21 January 2019|website=VoxEU.org|access-date=21 January 2019|last3=Han|first3=Lu}}{{cite web|url=https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13446|title=DP13446 Renegotiation of Trade Agreements and Firm Exporting Decisions: Evidence from the Impact of Brexit on UK Exports|website=cepr.org|date=13 January 2019 |language=en|access-date=21 January 2019}}{{cite journal|last1=Graziano|first1=Alejandro|last2=Handley|first2=Kyle|last3=Limão|first3=Nuno|date=2018|title=Brexit Uncertainty and Trade Disintegration|series=Working Paper Series |doi=10.3386/w25334|s2cid=85512380|url=https://www.nber.org/papers/w25334|doi-access=free}}{{Cite news|url=https://theconversation.com/brexit-has-already-hurt-eu-and-non-eu-exports-by-up-to-13-new-research-105334|title=Brexit has already hurt EU and non-EU exports by up to 13% – new research|last=Soegaard|first=Christian|work=The Conversation|access-date=5 November 2018|language=en}}{{cite web|last1=Douch|first1=Mustapha|last2=Edwards|first2=T. Huw|last3=Soegaard|first3=Christian|date=2018|title=The Trade Effects of the Brexit Announcement Shock|url=https://ideas.repec.org/p/wrk/warwec/1176.html|language=en|access-date=29 April 2019|archive-url=https://web.archive.org/web/20181106004634/https://ideas.repec.org/p/wrk/warwec/1176.html|archive-date=6 November 2018|url-status=dead}} A 2019 analysis found that British firms substantially increased offshoring to the European Union after the Brexit referendum, whereas European firms reduced new investments in the UK.{{cite web|url=https://voxeu.org/article/brexit-and-outward-investment-uk-firms|title=Voting with their money: Brexit and outward investment by UK firms|last1=Breinlich|first1=Holger|last2=Leromain|first2=Elsa|date=12 February 2019|website=VoxEU.org|access-date=13 February 2019|last3=Novy|first3=Dennis|last4=Sampson|first4=Thomas}}{{Cite news|url=https://uk.reuters.com/article/uk-britain-eu-investment-idUKKCN1Q003D|archive-url=https://web.archive.org/web/20190211093547/https://uk.reuters.com/article/uk-britain-eu-investment-idUKKCN1Q003D|url-status=dead|archive-date=11 February 2019|title=Brexit referendum spurs British companies into investing in EU|date=11 February 2019|work=Reuters|access-date=13 February 2019|language=en}}

Short-term macroeconomic forecasts by the Bank of England and other banks of what would happen immediately after the Brexit referendum were too pessimistic.{{cite news|url=https://www.centralbanking.com/central-banking-journal/feature/2481625/central-bank-of-the-year-bank-of-england|title=Central bank of the year: Bank of England – Central Banking|date=16 February 2017|work=Central Banking|access-date=22 November 2017|language=en}} The assessments assumed that the referendum results would create greater uncertainty in markets and reduce consumer confidence more than it did. A number of economists noted that short-term macroeconomic forecasts are generally considered unreliable, as they are something that academic economists do not do, but rather banks do.{{cite web|url=https://mainlymacro.blogspot.com/2017/02/how-brexit-advocates-intend-to-smear.html|title=mainly macro: How Brexit advocates intend to smear economics|last=Macro|first=Mainly|date=9 February 2017|website=mainly macro|access-date=22 November 2017}}{{Cite news|url=https://www.theguardian.com/business/2017/aug/10/experts-strike-back-how-economists-proved-right-on-brexit|title=The experts strike back! How economists are being proved right on Brexit|last=Eichengreen|first=Barry|date=10 August 2017|work=The Guardian|access-date=28 November 2017|issn=0261-3077}}{{cite journal|last=Sampson|first=Thomas|year=2017|title=Brexit: The Economics of International Disintegration|journal=Journal of Economic Perspectives|volume=31|issue=4|pages=163–184|doi=10.1257/jep.31.4.163|issn=0895-3309|quote=The results I summarize in this section focus on long-run effects and have a forecast horizon of 10 or more years after Brexit occurs. Less is known about the likely dynamics of the transition process or the extent to which economic uncertainty and anticipation effects will impact the economies of the United Kingdom or the European Union in advance of Brexit.|doi-access=free|hdl=10419/171132|hdl-access=free}} Economists have compared short-term economic forecasts to weather forecasts whereas the long-term economic forecasts are akin to climate forecasts: the methodologies used in long-term forecasts are "well-established and robust".{{cite web|url=https://www.ft.com/content/f1c1dd00-d812-11e6-944b-e7eb37a6aa8e|title=Andy Haldane is wrong: there is no crisis in economics|author=David Miles|date=11 January 2017|website=Financial Times}}

At the end of transition period, a trade agreement was enacted between the EU and the UK. Its implementation was rife with bureaucracy and uncertainty.{{Cite web|url=http://www.theguardian.com/politics/2021/jan/10/baffling-brexit-rules-threaten-export-chaos-gove-is-warned|title=Baffling Brexit rules threaten export chaos, Gove is warned|date=10 January 2021|website=the Guardian}}

{{further|2021–present United Kingdom cost-of-living crisis}}

There was overwhelming or near-unanimous agreement among economists that leaving the European Union would adversely affect the British economy in the medium- and long-term.{{#tag:ref|See:{{Cite news |url=https://www.nytimes.com/2016/05/22/business/international/brexit-referendum-eu-economy.html |title='Brexit,' a Feel-Good Vote That Could Sink Britain's Economy |last=Goodman |first=Peter S. |date=20 May 2016 |work=The New York Times|access-date=28 November 2017 |issn=0362-4331 |quote=finding economists who say they believe that a Brexit will spur the British economy is like looking for a doctor who thinks forswearing vegetables is the key to a long life}}{{cite web |url=http://voxeu.org/content/brexit-beckons-thinking-ahead-leading-economists |title=Brexit Beckons: Thinking ahead by leading economists |last=Baldwin |first=Richard |date=31 July 2016 |website=VoxEU.org |access-date=22 November 2017 |quote=On 23 June 2016, 52% of British voters decided that being the first country ever to leave the EU was a price worth paying for 'taking back control', despite advice from economists clearly showing that Brexit would make the UK 'permanently poorer' (HM Treasury 2016). The extent of agreement among economists on the costs of Brexit was extraordinary: forecast after forecast supported similar conclusions (which have so far proved accurate in the aftermath of the Brexit vote). |archive-date=25 November 2017 |archive-url=https://web.archive.org/web/20171125093912/http://voxeu.org/content/brexit-beckons-thinking-ahead-leading-economists |url-status=dead }}{{cite news |url=https://www.ft.com/content/c2b0359e-d0dc-11e6-b06b-680c49b4b4c0 |title=Most economists still pessimistic about effects of Brexit |website=Financial Times |date=7 January 2017 |access-date=22 November 2017|last1=Giles |first1=Chris |last2=Tetlow |first2=Gemma }}{{cite web |url=https://www.ft.com/content/dc62922a-204b-11e7-a454-ab04428977f9 |title=Brexit will damage UK standards of living, say economists |first=Chris |last=Giles |date=16 April 2017 |website=Financial Times |access-date=22 November 2017 |quote=Unlike the short-term effects of Brexit, which have been better than most had predicted, most economists say the ultimate impact of leaving the EU still appears likely to be more negative than positive. But the one thing almost all agree upon is that no one will know how big the effects are for some time.}}{{Cite news |url=https://theconversation.com/why-is-the-academic-consensus-on-the-cost-of-brexit-being-ignored-59540 |title=Why is the academic consensus on the cost of Brexit being ignored? |last=Wren-Lewis |first=Simon |work=The Conversation|access-date=22 November 2017 |language=en}}{{Cite news |url=https://www.bloomberg.com/news/articles/2017-02-22/brexit-s-fallout-on-u-k-economy-seen-as-chronic-not-crippling |title=Brexit to Hit Jobs, Wealth and Output for Years to Come, Economists Say |date=22 February 2017 |publisher=Bloomberg L.P.|access-date=22 November 2017 |quote="The U.K. economy may be paying for Brexit for a long time to come... It won't mean Armageddon, but the broad consensus among economists—whose predictions about the initial fallout were largely too pessimistic—is for a prolonged effect that will ultimately diminish output, jobs and wealth to some degree."}}{{cite news |url=https://www.economist.com/news/britain/21727078-patrick-minford-thinks-gdp-could-increase-68-most-economists-say-brexit-will-hurt |title=Most economists say Brexit will hurt the economy – but one disagrees |newspaper=The Economist|access-date=22 November 2017 |language=en}}{{cite news |url=https://www.independent.co.uk/news/business/analysis-and-features/uk-economic-forecast-brexit-reason-economy-living-standards-wage-loss-households-city-a8072436.html |title=This is the real reason the UK's economic forecasts look so bad |date=23 November 2017 |work=The Independent|access-date=28 November 2017 |quote=One thing economists do generally agree on is that leaving the European Union and putting new trade barriers between Britain and our largest and closest trading partners is extremely unlikely to boost UK productivity growth—and is far more likely to slow it}}|group=lower-alpha}}{{cite web|url=https://piie.com/publications/working-papers/brexit-everyone-loses-britain-loses-most|title=Brexit: Everyone Loses, but Britain Loses the Most|date=1 March 2019|website=PIIE|language=en|access-date=17 March 2019}} Surveys of economists in 2016 showed overwhelming agreement that Brexit would likely reduce the UK's real per-capita income level.{{cite web|url=http://www.igmchicago.org/surveys/brexit-ii|title=Brexit survey|website=igmchicago.org|access-date=1 November 2017}}{{cite web|url=http://www.igmchicago.org/surveys/brexit-2|title=Brexit survey II|website=igmchicago.org|access-date=1 November 2017}}{{Cite news|url=https://www.theguardian.com/politics/2016/may/28/economists-reject-brexit-boost-cameron|title=Economists overwhelmingly reject Brexit in boost for Cameron|last1=Sodha|first1=Sonia |author-link=Sonia Sodha|date=28 May 2016|work=The Observer|access-date=1 November 2017|last2=Helm|first2=Toby|issn=0029-7712|last3=Inman|first3=Phillip}} Surveys in 2017 and 2019 of existing academic research found that the credible estimates ranged between GDP losses of 1.2–4.5% for the UK, and a cost of between 1 and 10% of the UK's income per capita. These estimates varied depending on whether the UK left via a 'hard' or 'soft' Brexit. In January 2018, the UK government's own Brexit analysis was leaked; it showed that UK economic growth would be stunted by 2–8% for at least 15 years following Brexit, depending on the leave scenario.{{Cite news|url=https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be|title=The Government's Own Brexit Analysis Says The UK Will Be Worse Off in Every Scenario Outside The EU|work=BuzzFeed|access-date=30 January 2018|language=en}}{{cite news|url=https://www.ft.com/content/b3d35136-0543-11e8-9650-9c0ad2d7c5b5|title=Secret data show Britain worse off under all Brexit scenarios|website=Financial Times|date=30 January 2018|access-date=30 January 2018|last1=Parker|first1=George}}

According to most economists, EU membership has a strong, positive effect on trade and, as a result, the UK's trade would be worse off when it left the EU.{{cite web|url=https://www.gov.uk/government/publications/hm-treasury-analysis-the-long-term-economic-impact-of-eu-membership-and-the-alternatives|title=HM Treasury analysis: the long-term economic impact of EU membership and the alternatives|publisher=Government of the United Kingdom|access-date=8 June 2016}}{{cite web|date=May 2016|title=Brexit and the UK's Public Finances|url=http://www.ifs.org.uk/uploads/publications/comms/r116.pdf|publisher=Institute for Fiscal Studies|issue=IFS Report 116|access-date=18 June 2016|archive-date=19 July 2018|archive-url=https://web.archive.org/web/20180719033429/https://www.ifs.org.uk/uploads/publications/comms/r116.pdf|url-status=dead}}{{cite news|url=https://www.economist.com/news/britain/21696517-most-estimates-lost-income-are-small-risk-bigger-losses-large-economic|title=The economic consequences|newspaper=The Economist|access-date=1 November 2017|language=en}}{{cite news|url=https://www.economist.com/news/finance-and-economics/21697858-british-economy-would-be-neither-destroyed-nor-unleashed-leaving-eu-if|title=If it ain't broke, don't Brexit|newspaper=The Economist|access-date=1 November 2017|language=en}} According to a study by University of Cambridge economists, under a hard Brexit, whereby the UK reverts to WTO rules, one-third of UK exports to the EU would be tariff-free, one-quarter would face high trade barriers and other exports risk tariffs in the range of 1–10%.{{cite web|url=http://voxeu.org/article/analysing-exposure-uk-exports-eu-tariffs-quotas-and-antidumping-under-no-deal|title=A granular analysis of the exposure of UK exports to EU tariffs, quotas and antidumping under 'no deal'|last1=Corsetti|first1=Giancarlo|last2=Crowley|first2=Meredith|date=13 December 2017|website=VoxEU.org|access-date=13 December 2017|last3=Exton|first3=Oliver|last4=Han|first4=Lu}} A 2017 study found that "almost all UK regions are systematically more vulnerable to Brexit than regions in any other country."{{cite journal|last1=Chen|first1=Wen|last2=Los|first2=Bart|last3=McCann|first3=Philip|last4=Ortega-Argilés|first4=Raquel|last5=Thissen|first5=Mark|last6=van Oort|first6=Frank|year=2017|title=The continental divide? Economic exposure to Brexit in regions and countries on both sides of The Channel|journal=Papers in Regional Science|volume=97|pages=25–54|doi=10.1111/pirs.12334|issn=1435-5957|doi-access=free|hdl=1765/104600|hdl-access=free}} A 2017 study examining the economic impact of Brexit-induced reductions in migration found that there would likely be "a significant negative impact on UK GDP per capita (and GDP), with marginal positive impacts on wages in the low-skill service sector."{{cite journal|last1=Portes|first1=Jonathan|last2=Forte|first2=Giuseppe|date=1 March 2017|title=The economic impact of Brexit-induced reductions in migration|journal=Oxford Review of Economic Policy|volume=33|issue=suppl_1|pages=S31–S44|doi=10.1093/oxrep/grx008|issn=0266-903X|doi-access=free}} It is unclear how changes in trade and foreign investment will interact with immigration, but these changes are likely to be important.

In October 2021, the UK government's Office of Budget Responsibility calculated that Brexit would cost 4% of GDP per annum over the long term.{{cite news |date=2021-10-27 |title=Impact of Brexit on economy 'worse than Covid' |language=en-GB |work=BBC News |url=https://www.bbc.com/news/business-59070020 |access-date=2022-05-25}} a 4% GDP hit could translate into a £32 billion cost per annum to the UK taxpayer.{{cite news |date=2021-11-03 |title=Boris Johnson cannot escape the costs of Brexit |work=Financial Times |url=https://www.ft.com/content/6885073e-6625-4259-a139-5a7bc6122d72 |access-date=2022-05-25}} After rebates, the UK's EU membership fee in 2018 was £13.2 billion.{{Cite web |date=2016-02-25 |title=The UK's EU membership fee |url=https://fullfact.org/europe/our-eu-membership-fee-55-million/ |access-date=2022-05-25 |website=Full Fact |language=en}}

CIPS has reported think tank Campaign for European Reform's research, which found that UK goods trade was 11.2%, or £8.5 billion, lower in September 2021 than it would have been according to the Office for Budget Responsibility's forecast in March 2016.Hazlehurst, J., [https://www.cips.org/supply-management/analysis/2022/february/the-brexit-saga--where-are-we-now/ Brexit – why were 30% of businesses 'not at all prepared' for change?], published 18 February 2022, accessed 18 June 2022

A 2022 study from research firm Resolution Foundation found that Brexit had reduced the openness and competitiveness of the British economy.{{cite web |last=Atkinson |first=Andrew |date=2022-06-21 |title=Brexit Has Made UK Less Open and Competitive, Study Finds |url=https://www.bloomberg.com/news/articles/2022-06-21/brexit-has-made-uk-less-open-and-competitive-study-finds?leadSource=uverify%20wall |access-date=2022-09-28 |website=Bloomberg}}

On January 11, 2024, the London Mayor's Office released the "Mayor highlights Brexit damage to London economy".{{cite web|url=https://www.london.gov.uk/new-report-reveals-uk-economy-almost-ps140billion-smaller-because-brexit|title=Mayor highlights Brexit damage to London economy|publisher=Mayor of London}} The release cites the independent report by Cambridge Econometrics that London has almost 300,000 fewer jobs, and nationwide two million fewer jobs as a direct consequence of Brexit. Brexit is recognized as a key contributor to the 2023 cost-of-living crisis with the average citizen being nearly £2,000 worse off, and the average Londoner nearly £3,400 worse off, in 2023 as a result of Brexit. In addition, UK real Gross Value Added was approximately £140bn less in 2023 than it would have been had the UK remained in the Single Market.

Economists and analysts at Cambridge Econometrics found that, by 2035, the UK is anticipated to have three million fewer jobs, 32% lower investment, 5% lower exports and 16% lower imports, than it would have had been. The report states that the UK will be £311bn worse off by 2035 due to leaving EU. https://news.sky.com/story/brexit-new-report-suggests-uk-311bn-worse-off-by-2035-due-to-leaving-eu-13046256

Since fiscal impacts will play a major role in the outcome of Brexit, former primer minister Theresa May stated that money would be taking first place as the key importance surrounding Brexit, the others being borders and laws. The Brexit divorce bill was essentially a financial settlement in which the United Kingdom must pay off their liabilities to the EU.{{cite journal|last=Menon|first=Anand|date=Spring 2019|title=The economic consequences of the Brexit deal|url=https://ukandeu.ac.uk/wp-content/uploads/2018/11/The-economic-consequences-of-Brexit.pdf|journal=UK and EU}} This includes, for example, unpaid contributions to the EU's multi-year finances. There is no current set figure for the bill but estimates have shown it to be at least £39 billion.{{cite web|url=https://www.ft.com/content/415039bc-5137-11e9-b401-8d9ef1626294|title=Theresa May to ask MPs to vote on Brexit divorce deal|last=Parker|first=George|date=28 March 2019|website=Financial Times}} First year costs (2018–2019) were expected to be close to £14 billion and decreasing to £7 billion by 2022–2023.

Following the Brexit referendum, many companies shifted assets, offices, or businesses operations out of Britain and to continental Europe and Ireland.Peter S. Goodman, [https://www.nytimes.com/2019/04/01/business/british-business-brexit.html For Many British Businesses, Brexit Has Already Happened], New York Times (1 April 2019). By the beginning of April 2019, banks had transferred more than US$1 trillion out of Britain, and asset management and insurance companies transferred US$130 billion out of Britain.

A March 2019 report from the independent research institute New Financial identified 269 companies in the banking or financial services sector that had relocated portions of their businesses or staff following Brexit; of these moves, 239 were confirmed as Brexit-related.William Wright, Christian Benson & Eivind Friis Hamre, [https://newfinancial.org/wp-content/uploads/2019/03/2019.03-New-Financial-Brexitometer-EXT-HIGH-RES.pdf The New Financial Brexitometer], New Financial (March 2019). The greatest number of moves were to Dublin (30%), followed by Luxembourg (18%), Frankfurt (12%), Paris (12%), and Amsterdam (10%).

{{See also|Brexit and arrangements for science and technology}}Supporters of withdrawal argued that ending net contributions to the EU would allow for tax cuts or government spending increases.[https://www.theguardian.com/commentisfree/2016/apr/14/british-austerity-brexit-budget-nhs-disability-benefits-property The end of British austerity starts with Brexit] J. Redwood, The Guardian, 14 April 2016 On the basis of Treasury figures, in 2014 the United Kingdom's gross national contribution (ignoring the rebate) was £18.8 billion, about 1% of GDP, or £350 million a week. Because the UK receives (per capita) less EU spending than other member states, a rebate was negotiated; net of this rebate, the contribution was £14.4 billion, approximately 0.8% of GDP, or £275 million a week. If EU spending in Britain is also taken into account, the average net contribution for the next five years is estimated at about £8 billion a year, which is about 0.4% of national income, or £150 million per week.{{cite book |page=8 |isbn=978-1-911102-13-7 |title=Brexit and the UK's Public Finances |publisher=The Institute for Fiscal Studies |url=http://www.ifs.org.uk/uploads/publications/comms/r116.pdf |access-date=2 April 2018 |date=May 2016 |id=IFS Report 116 |archive-date=19 July 2018 |archive-url=https://web.archive.org/web/20180719033429/https://www.ifs.org.uk/uploads/publications/comms/r116.pdf |url-status=dead }} The Institute for Fiscal Studies have said that the majority of forecasts of the impact of Brexit on the UK economy indicated that the government would have less money to spend even if it no longer had to pay into the EU.{{cite book |page=66 |isbn=978-1-911102-13-7 |title=Brexit and the UK's Public Finances |publisher=The Institute for Fiscal Studies |url=http://www.ifs.org.uk/uploads/publications/comms/r116.pdf |access-date=2 April 2018 |date=May 2016 |id=IFS Report 116 |archive-date=19 July 2018 |archive-url=https://web.archive.org/web/20180719033429/https://www.ifs.org.uk/uploads/publications/comms/r116.pdf |url-status=dead }}

According to economist Paul Krugman, Brexit supporters' assertions that leaving the single market and customs union might increase UK exports to the rest of the world are wrong. He considers the costs of Brexit might be around 2 percent of GDP.{{Cite news|url=https://www.independent.co.uk/news/business/brexit-paul-krugman-zero-chance-britain-better-off-eu-leave-single-market-custom-union-exports-trade-a7965871.html|title=Brexit: 'Zero chance' leaving EU will make Britons better off, Nobel laureate economist Paul Krugman says|work=The Independent|access-date=1 November 2017|language=en}}

European experts from the World Pensions Council (WPC) and the University of Bath have argued that, beyond short-lived market volatility, the long-term economic prospects of Britain remain high, notably in terms of country attractiveness and foreign direct investment (FDI): "Country risk experts we spoke to are confident the UK's economy will remain robust in the event of an exit from the EU. 'The economic attractiveness of Britain will not go down and a trade war with London is in no one's interest,' says M Nicolas Firzli, director-general of the World Pensions Council (WPC) and advisory board member for the World Bank Global Infrastructure Facility [...] Bruce Morley, lecturer in economics at the University of Bath, goes further to suggest that the long-term benefits to the UK of leaving the Union, such as less regulation and more control over Britain's trade policy, could outweigh the short-term uncertainty observed in the [country risk] scores."{{cite web|first= Claudia |last= De Meulemeester |title= Country Risk: Experts Say UK economy Will Quickly Recover from Brexit Shock |url=http://www.euromoney.com/Article/3563119/Country-risk-Experts-say-UK-economy-will-quickly-recover-from-Brexit-shock.html |website= Euromoney|date= 17 June 2016 |access-date=17 June 2016}}

The mooted importance of the UK's membership of the EU as a lure for FDI has long been stressed by supporters of the UK's continued involvement in the EU. In this view, foreign firms see the UK as a gateway to other EU markets, with the UK economy benefiting from its resulting attractiveness as a location for activity. The UK is certainly a major recipient of FDI. In 2014, it held the second largest stock of inward investment in the world, amounting to just over £1 trillion or almost 7% of the global total. This was more than double the 3% accounted for by Germany and France. On a per capita basis, the UK is the clear front-runner among major economies with a stock of FDI around three times larger than the level in other major European economies and 50% larger than in the US.

The BBC reported on 28 April 2017 that property investment firm JLL data shows Asian investors accounted for 28% of the transactions in the UK property market in 2016, up from the 17% the year before – indicating that Brexit is not dissuading Asian property investors. The BBC also cited Chinese international property portal Juwai.com, which reported a 60% increase in enquiries into UK property in the prior 12 months.{{cite news|last1=Vaswani|first1=Karishma|title=Brexit not deterring Asian investors from UK property market|work=BBC News|date=28 April 2017|url=https://www.bbc.com/news/business-39732816|access-date=1 May 2017}} Property firm CBRE Group said in January 2017 that Brexit has increased risk in UK property markets by creating new uncertainties.{{cite news|last1=Evans|first1=Judith|title=Brexit set to weigh on property prices in 2017|url=https://www.ft.com/content/e91b154c-cd11-11e6-864f-20dcb35cede2|work=Financial Times|date=4 January 2017|access-date=1 May 2017}}

With Brexit, EU law is no longer applicable in the UK. This means British mobile network operators — like EE Limited — will be free to charge users for roaming service.{{Cite web|url=https://www.lbc.co.uk/news/ee-roaming-charges-eu-brexit-o2/|title=EE reintroduces EU roaming charges, despite saying it wouldn't after Brexit|website=LBC}}

When the London Stock Exchange opened on Friday 24 June 2016, the FTSE 100 fell from 6338.10 to 5806.13 in the first ten minutes of trading. It recovered to 6091.27 after a further 90 minutes before further recovering to 6162.97 by the end of the day's trading. This equated to a fall of 3% by the close of trading.{{Cite news|url=https://www.bbc.com/news/business-36611512|title=Pound plunges after Leave vote|work=BBC News|date=24 June 2016}} When the markets reopened the following Monday, the FTSE 100 showed a steady decline, losing over 2% by mid-afternoon.{{cite web|title=FTSE 100 at the London Stock Exchange|url=http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/indices/summary/summary-indices.html?index=UKX|access-date=24 June 2016}} Upon opening later on the Friday after the referendum, the US Dow Jones Industrial Average dropped nearly 450 points or about 2.5% in less than half an hour. The Associated Press called the sudden worldwide stock market decline a stock market crash.{{Cite news | url=http://bigstory.ap.org/article/d4930c2180b143d685213a75e916bee8/british-vote-leaving-eu-rocks-world-financial-markets | first1=Danica | last1=Kirka | first2=Youkyung | last2=Lee | title=Stocks crash as UK vote to quit EU shocks investors | date=24 June 2016 | access-date=24 June 2016 | newspaper=AP The Big Story | agency=Associated Press | location=London | archive-date=3 July 2016 | archive-url=https://web.archive.org/web/20160703190302/http://bigstory.ap.org/article/d4930c2180b143d685213a75e916bee8/british-vote-leaving-eu-rocks-world-financial-markets | url-status=dead }} Internationally, more than US$2{{nbsp}}trillion of wealth in equities markets was wiped out in the highest one-day sell-off in recorded history, in absolute terms.{{Cite news|url=https://www.cnbc.com/2016/06/26/brexit-cost-investors-2-trillion-the-worst-one-day-drop-ever.html | first=Javier E. | last=David | title=Brexit cost investors $2 trillion, the worst one day drop ever | publisher=CNBC | date=26 June 2016 | access-date=26 June 2016}}{{cite web|url=https://www.theguardian.com/business/live/2016/jun/24/global-markets-ftse-pound-uk-leave-eu-brexit-live-updates|title=Brexit panic wipes $2 trillion off world markets – as it happened|first1=Graeme|last1=Wearden|first2=Nick|last2=Fletcher|first3=Sam|last3=Thielman|first4=Julia|last4=Kollewe|first5=Dominic|last5=Rushe|first6=Phillip|last6=Inman|first7=Jill|last7=Treanor|first8=Simon|last8=Goodley|first9=Angela|last9=Monaghan|first10=Patrick|last10=Collinson|first11=Justin|last11=McCurry|date=24 June 2016|work=The Guardian}} The stock market losses amounted to a total of 3 trillion US dollars by 27 June;{{Cite news|url=https://www.cnbc.com/2016/06/27/brexit-related-losses-widen-in-relentless-sell-off.html | title=Brexit-related losses widen to $3 trillion in relentless 2-day sell-off | first=Javier E. | last=David | publisher=CNBC | date=27 June 2016 | access-date=28 June 2016}} up to the same date, the FTSE 100 index had lost £85 billion.{{cite news |last1=Cunningham |first1=Tara |last2=Davidson |first2=Lauren |date=27 June 2016 |title=FTSE 100 surrenders £85bn in two days, pound slides and banking stocks plunge in Brexit aftermath |url=https://www.telegraph.co.uk/business/2016/06/27/george-osborne-to-speak-in-attempt-to-calm-markets-following-bre/ |newspaper=The Daily Telegraph|location=London, UK |access-date=27 June 2016 |quote=FTSE 100 surrenders £85bn in two days, pound slides and banking stocks plunge in Brexit aftermath}} Near the close of trading on 27 June, the domestically-focused FTSE 250 Index was down approximately 14% compared to the day before the referendum results were published.{{cite news |url=https://www.economist.com/blogs/buttonwood/2016/06/markets-after-referendum |title=Markets after the referendum – Britain faces Project Reality |last=Buttonwood |date=27 June 2016 |newspaper=The Economist |publisher=The Economist Newspaper Limited |access-date=27 June 2016}}

However, by 1 July the FTSE 100 had risen above pre-referendum levels, to a ten-month high. Taking the previous fall into account, this represented the index's largest single-week rise since 2011.{{cite news |date=1 July 2016 |title=Post-Brexit rebound sees FTSE setting biggest weekly rise since 2011 |url=https://finance.yahoo.com/news/post-brexit-vote-rebound-sees-071820694.html/ |agency=Reuters|location=London, UK |access-date=3 July 2016}} On 11 July, it officially entered bull market territory, having risen by more than 20% from its February low.{{cite news|url=https://www.bbc.co.uk/news/business-36762631|title=FTSE 100 rises to 11-month high|work=BBC News|date=11 July 2016}} The FTSE 250 moved above its pre-referendum level on 27 July.{{cite news|url=https://www.telegraph.co.uk/business/2016/07/27/ftse-100-set-to-open-higher-as-markets-eye-us-fed-rates-decision/|title=FTSE 100 hits one-year high and FTSE 250 erases post-Brexit losses as UK economy grows by 0.6pc|newspaper=The Daily Telegraph|date=27 July 2016|access-date=27 July 2016}} In the US, the S&P 500, a broader market than the Dow Jones, reached an all-time high on 11 July.{{cite news|url=https://next.ft.com/content/771c7bba-3cae-3cce-9591-9135675b4d6c|title=S&P 500 hits record high for first time since '15|newspaper=Financial Times|date=11 July 2016|access-date=12 July 2016}}

On the morning of 24 June, the pound sterling fell to its lowest level against the US dollar since 1985,{{Cite web|url=https://www.bbc.co.uk/news/live/uk-politics-36570120|title=Corbyn ballot challenge ruling & Boris Johnson in Paris talks|website=BBC News}} marking the pound down 10% against the US dollar and 7% against the euro. The drop from $1.50 to $1.37 was the biggest move for the currency in any two-hour period in history.{{cite web|url=https://www.theguardian.com/business/2016/jun/23/british-pound-given-boost-by-projected-remain-win-in-eu-referendum|title=Pound slumps to 31-year low after Brexit vote|last1=Treanor|first1=Jill|last2=Goodley|first2=Simon|date=24 June 2016|website=The Guardian|access-date=24 June 2016|last3=Allen|first3=Katie}} The pound remained low, and on 8 July became the worst performing currency of the year, against 31 other major currencies, performing worse than the Argentine peso, the previous lowest currency.{{cite news|first=Marianna|last=Duarte De Aragao |url=https://www.bloomberg.com/news/articles/2016-07-08/pound-overtakes-argentine-peso-to-become-2016-s-worst-performer |title=Pound Overtakes Argentine Peso to Become 2016's Worst Performer |work=Bloomberg News |publisher=Bloomberg |date=8 July 2016 |access-date=8 July 2016}} By contrast, the pound's trade-weighted index is only back at levels seen in the period 2008–2013.{{cite news|first=Hazel |last=Sheffield |url=https://www.independent.co.uk/news/business/news/pound-sterling-argentine-peso-worst-performing-currency-eu-referendum-brexit-a7127246.html |title=Pound sterling beats Argentine peso to become 2016's worst performing currency |newspaper=The Independent |publisher=Independent Print Limited |date=8 July 2016 |access-date=13 July 2016}}{{cite news|first=Alistair |last=Osborne |url=https://www.thetimes.co.uk/article/own-goal-is-gift-to-argentina-6r70clsw7 |title=Own goal is gift to Argentina |newspaper=The Times |publisher=Times Group Newspapers |date=9 July 2016 |access-date=13 July 2016}}

The referendum result also had an immediate economic effect on a number of other countries. The South African rand experienced its largest single-day decline since 2008, dropping in value by over 8% against the US dollar.{{cite news |url=http://www.iol.co.za/business/markets/currencies/rand-slumps-more-than-8-against-dollar-2038150 | title=Rand slumps more than 8% against dollar | agency=Reuters | date=24 June 2016 | access-date=26 June 2016}}{{cite news |url=https://qz.com/715710/brexit-could-be-terrible-for-africas-largest-economies/ | title=Brexit will be terrible for Africa's largest economies | work=Quartz | date=24 June 2016 | access-date=26 June 2016 | author=Kuo, Lily |author2=Kazeem, Yomi}} Other countries negatively affected included Canada, whose stock exchange fell 1.70%,{{cite news |url=https://www.cbc.ca/news/business/brexit-vote-business-impact-1.3650553 | title=Loonie loses more than a penny, TSX sheds 239 points after Britons vote to quit EU | publisher=Canadian Broadcasting Corporation | date=24 June 2016 | access-date=26 June 2016 | author=Evans, Pete}} Nigeria, and Kenya. This was partly due to a general global financial shift out of currencies seen as risky and into the US dollar, and partly due to concerns over how the UK's withdrawal from the EU would affect the economies and trade relations of countries with close economic links to the United Kingdom.

On 5 January 2017, Andy Haldane, the Chief Economist and the Executive Director of Monetary Analysis and Statistics at the Bank of England, admitted that forecasts predicting an economic downturn due to the referendum have so far been inaccurate and noted strong market performance since the referendum.{{cite web | title=Bank of England Economist: Brexit Predictions Were Wrong |url=https://www.foxnews.com/world/2017/01/06/bank-england-economist-brexit-predictions-were-wrong.html | date=6 January 2017 | publisher=Fox News (from the Associated Press) | access-date=18 January 2017}}{{cite news | last1=Inman | first1=Phillip | title=Chief Economist of Bank of England Admits Errors in Brexit Forecasting |url=https://www.theguardian.com/business/2017/jan/05/chief-economist-of-bank-of-england-admits-errors | date=5 January 2017 | newspaper=The Guardian | access-date=18 January 2017}}{{cite news | last1=Swinford | first1=Steven | title=Bank of England Admits 'Michael Fish' Moment with Dire Brexit Predictions |url=https://www.telegraph.co.uk/news/2017/01/05/bank-england-admits-michael-fish-moment-dire-brexit-predictions/ | date=6 January 2017 | newspaper=The Daily Telegraph | access-date=18 January 2017}}

In January 2021, Euronext became Europe's largest stock market, as London lost its dominance for the first time since 1986.{{Cite web|url=http://theconversation.com/amsterdam-ousts-london-as-europes-top-share-hub-taking-trading-back-to-where-it-all-began-155236|title=Amsterdam ousts London as Europe's top share hub, taking trading back to where it all began|first1=Edward Thomas|last1=Jones|first2=James|last2=Bowden|website=The Conversation|date=12 February 2021 }}

On 27 June 2016, Chancellor of the Exchequer George Osborne attempted to reassure financial markets that the UK economy was not in serious trouble. This came after media reports that a survey by the Institute of Directors suggested that two-thirds of businesses believed that the outcome of the referendum would produce negative results as well as falls in the value of sterling and the FTSE 100. Some British businesses had also predicted that investment cuts, hiring freezes and redundancies would be necessary to cope with the results of the referendum.{{cite news |last=Wood |first=Zoe |date=26 June 2016 |title=Firms plan to quit UK as City braces for more post-Brexit losses |url=https://www.theguardian.com/business/2016/jun/26/city-of-london-expecting-further-post-brexit-losses-when-trade-reopens |newspaper=The Guardian |location=London, UK |access-date=27 June 2016}} Osborne indicated that Britain was facing the future "from a position of strength" and there was no current need for an emergency Budget.{{cite web |url=https://www.bbc.com/news/business-36637732 |title=Osborne: UK economy in a position of strength |author= |date=27 June 2016 |website=BBC News – Business |publisher=BBC |access-date=27 June 2016 |quote=George Osborne has said the UK is ready to face the future "from a position of strength" and indicated there will be no immediate emergency Budget.}} "No-one should doubt our resolve to maintain the fiscal stability we have delivered for this country .... And to companies, large and small, I would say this: the British economy is fundamentally strong, highly competitive and we are open for business."{{cite news |url=https://www.cnn.com/2016/06/27/europe/uk-brexit-jeremy-corbyn-boris-johnson/ |title=Brexit: UK government shifts to damage control |last1=Dewan |first1=Angela |last2=McKirdy |first2=Euan |date=27 June 2016 |publisher=CNN |access-date=27 June 2016 |quote=Not since World War II has Britain faced such an uncertain future.}}

On 14 July 2016 Philip Hammond, Osborne's successor as Chancellor, told BBC News the referendum result had caused uncertainty for businesses, and that it was important to send "signals of reassurance" to encourage investment and spending. He also confirmed there would not be an emergency budget: "We will want to work closely with the governor of the Bank of England and others through the summer to prepare for the Autumn Statement, when we will signal and set out the plans for the economy going forward in what are very different circumstances that we now face, and then those plans will be implemented in the Budget in the spring in the usual way."{{cite news|url=https://www.bbc.co.uk/news/business-36792202 |title=Philip Hammond: Financial markets 'rattled' by Leave vote |work=BBC News |date=14 July 2016 |access-date=15 July 2016}}

It was expected that the weaker pound would also benefit aerospace and defence firms, pharmaceutical companies, and professional services companies; the share prices of these companies were boosted after the EU referendum.[https://www.ibtimes.co.uk/brexit-fallout-rolls-royce-glaxosmithkline-experian-are-big-winners-weak-pound-1569154 Brexit: Here are the three major winners from a weak pound right now] E. Shing, International Business Times, 6 July 2016

On 12 July 2016, the global investment management company BlackRock predicted the UK would experience a recession in late 2016 or early 2017 as a result of the vote to leave the EU, and that economic growth would slow down for at least five years because of a reduction in investment.{{cite news|first=Hazel |last=Sheffield |url=https://www.independent.co.uk/news/business/news/brexit-will-plunge-the-uk-into-a-recession-in-the-next-year-blackrock-says-a7134616.html |title=Brexit will plunge the UK into a recession in the next year, BlackRock says |newspaper=The Independent |publisher=Independent Print Limited |date=14 July 2016 |access-date=18 July 2016}} On 18 July, the UK-based economic forecasting group EY ITEM club suggested the country would experience a "short shallow recession" as the economy suffered "severe confidence effects on spending and business"; it also cut its economic growth forecasts for the UK from 2.6% to 0.4% in 2017, and 2.4% to 1.4% for 2018. The group's chief economic adviser, Peter Soencer, also argued there would be more long-term implications, and that the UK "may have to adjust to a permanent reduction in the size of the economy, compared to the trend that seemed possible prior to the vote".{{cite news|first=Zlata |last=Rodionova |url=https://www.independent.co.uk/news/business/news/uk-faces-short-recession-as-brexit-uncertainty-hits-house-prices-consumer-spending-and-jobs-ey-a7142616.html |title=UK faces short recession as Brexit uncertainty hits house prices, consumer spending and jobs, EY predicts |newspaper=The Independent |publisher=Independent Print Limited |date=18 July 2016 |access-date=18 July 2016}} Senior City investor Richard Buxton also argued there would be a "mild recession".{{cite news|first=Robin |last=De Peyer |url=https://www.standard.co.uk/news/uk/brexit-britain-set-for-recession-as-top-city-figure-warns-leaving-eu-will-be-horrible-a3297781.html |title=Britain 'set for recession' as Richard Buxton calls leaving EU 'horrible' |newspaper=London Evening Standard |date=18 July 2016 |access-date=18 July 2016}} On 19 July, the International Monetary Fund (IMF) reduced its 2017 economic growth forecast for the UK from 2.2% to 1.3%, but still expected Britain to be the second fastest growing economy in the G7 during 2016; the IMF also reduced its forecasts for world economic growth by 0.1% to 3.1% in 2016 and 3.4% in 2017, as a result of the referendum, which it said had "thrown a spanner in the works" of global recovery.{{cite news|first=Larry |last=Elliott |url=https://www.theguardian.com/business/2016/jul/19/imf-cuts-uk-growth-forecasts-following-brexit-vote |title=IMF cuts UK growth forecasts following Brexit vote |newspaper=The Guardian |date=19 July 2016 |access-date=19 July 2016}}

On 20 July 2016, a report released by the Bank of England said that although uncertainty had risen "markedly" since the referendum, it was yet to see evidence of a sharp economic decline as a consequence. However, around a third of contacts surveyed for the report expected there to be "some negative impact" over the following year.{{cite news|first1=Lucy |last1=Meakin |first2=Jill |last2=Ward |url=https://www.bloomberg.com/news/articles/2016-07-20/boe-sees-no-sharp-slowing-yet-even-as-brexit-boosts-uncertainty |title=BOE Sees No Sharp Slowing Yet Even as Brexit Boosts Uncertainty |work=Bloomberg News |publisher=Bloomberg |date=20 July 2016 |access-date=20 July 2016}}

In September 2016, following three months of positive economic data after the referendum, commentators suggested that many of the negative statements and predictions promoted from within the "remain" camp had failed to materialise,{{cite news|last=Ralph|first=Alex|title=Rally rewards bravery in the face of Project Fear|url=https://www.thetimes.co.uk/article/rally-rewards-bravery-in-the-face-of-project-fear-tkdz2h95n|date=2 September 2016|newspaper=The Times|access-date=2 October 2016}} but by December, analysis began to show that Brexit was having an effect on inflation.{{cite web|author=Katie Allen |url=https://www.theguardian.com/business/2016/dec/21/brexit-economy-referendum-inflation-uk-2017 |title=Brexit economy: inflation surge shows impact of vote finally beginning to bite |work=The Guardian |date=22 November 2016 |access-date=5 March 2017}}

Research by the Centre for European Reform{{clarify|reason=who are they and why is their "research" valid here?|date=September 2018}} suggests the UK economy is 2.5% smaller than it would have been if Remain had won the referendum. Public finances fell by £26 billion a year. This amounts to £500 million a week and is growing. An estimate suggested Britain's economy is 2.1% smaller than it would have been after the first quarter of 2018.[https://www.theguardian.com/politics/2018/sep/29/britain-bill-brexit-hits-500-million-pounds-a-week Brexit costing Britain £500m a week and rising, says report] The Observer On 23 September 2022, the day of the Truss-Kwarteng mini-budget, Mark Carney summarised the impact of Brexit as follows: "in 2016 the British economy was 90 per cent the size of Germany's. Now it is less than 70 per cent. And that calculation was made before today."{{cite news|url=https://www.ft.com/content/f1f0a66a-fa2c-4d70-9874-8003bdb3fb53 |last=Luce |first=Edward |title=Lunch with the FT: Mark Carney: 'Doubling down on inequality was a surprising choice' |newspaper=Financial Times |publisher=The Financial Times Limited |date=14 October 2022 |access-date=4 November 2022 |url-access=subscription |quote=Put it this way, in 2016 the British economy was 90 per cent the size of Germany's. Now it is less than 70 per cent. And that calculation was made before today.}}

Toyota announced plans for a one-day production pause at its Burnaston factory on 1 November 2019. The car maker cited uncertainty about the actual supply situation on "the first day of Brexit".{{cite news|url=https://www.reuters.com/article/us-britain-eu-toyota/toyota-wont-build-cars-at-uk-factory-the-day-after-brexit-idUSKCN1VK0W6|title=Toyota won't build cars at UK factory the day after Brexit|work=Reuters|date=30 August 2019|access-date=30 August 2019}}

While import and export looks like increasing in France, French customs considered this masks the "hub effect". Before the Brexit, British products transiting by France and sold in a third EU country were remaining within the EU and were considered an internal import of this third country. After Brexit, those exact same non-EU British products are now considered as imported into the European Union, with France as entry point, making them registered in French import statistics.https://www.euractiv.fr/section/royaume-uni-en-europe/news/brexit-lexcedent-commercial-de-la-france-avec-le-royaume-uni-sest-degrade-de-20-en-cinq-ans/

In 2024, French customs considered Brexit, in the meantime, has reduced trade between the UK and the EU, but increased trade between Popular China and the United Kingdom:https://www.lesechos.fr/monde/europe/depuis-le-brexit-le-royaume-uni-sest-detourne-de-leurope-2139739 Imports from the EU to the UK have dropped from 52% to 40%, while imports from China and the United-States have increased from 9% to 13% and from 9% to 12% respectively.https://www.euractiv.fr/section/royaume-uni-en-europe/news/brexit-lexcedent-commercial-de-la-france-avec-le-royaume-uni-sest-degrade-de-20-en-cinq-ans/

By 2023 there has been a considerable increase of freight shipping which by-passes the Dover-Calais route. The southeast Irish port of Rosslare and the French port of Cherbourg have expanded their capacities to enable direct shipping to and from the European mainland, according to reporting in The Guardian.{{Cite web |last1=Henley |first1=Jon |last2=Carroll |first2=Rory |url=https://www.theguardian.com/politics/2023/feb/25/ports-france-ireland-brexit-cherbourg-rosslare |title='Brits are suffering but for us it's boom time': how Brexit boosted French and Irish ports |website=theguardian.com |date=February 25, 2023 |access-date=February 27, 2023}}

On the day after the referendum, Bank of England Governor Mark Carney told a press conference:{{cite news|url=https://www.theguardian.com/politics/live/2016/jun/23/eu-referendum-result-live-counting-leave-remain-brain-in-europe|title=Brexit: Nicola Sturgeon says second Scottish referendum 'highly likely'|first1=Andrew|last1=Sparrow|first2=Matthew|last2=Weaver|first3=Philip|last3=Oltermann|first4=Adam|last4=Vaughan|first5=Anushka|last5=Asthana|first6=Mark|last6=Tran|first7=Jessica|last7=Elgot|first8=Holly|last8=Watt|first9=Jennifer|last9=Rankin|first10=Henry|last10=McDonald|first11=Maev|last11=Kennedy|first12=Frances|last12=Perraudin|first13=Arthur|last13=Neslen|first14=Lisa|last14=O'Carroll|first15=Nadia|last15=Khomami|first16=Steven|last16=Morris|first17=Pamela|last17=Duncan|first18=Katie|last18=Allen|first19=Severin|last19=Carrell|first20=Rowena|last20=Mason|first21=Helena|last21=Bengtsson|first22=Caelainn|last22=Barr|first23=Simon|last23=Goodley|first24=Libby|last24=Brooks|first25=Graeme|last25=Wearden|first26=Ben|last26=Quinn|first27=Randeep|last27=Ramesh|first28=Nick|last28=Fletcher|first29=Jill|last29=Treanor|first30=Justin|last30=McCurry|first31=Richard|last31=Adams|first32=Josh|last32=Halliday|first33=David|last33=Pegg|first34=Claire|last34=Phipps|first35=Deborah|last35=Mattinson|first36=Peter|last36=Walker|newspaper=The Guardian|date=24 June 2016}}

The capital requirements of our largest banks are now 10 times higher than before the financial crisis. The Bank of England has stress-tested those banks against scenarios far more severe than our country currently faces. As a result of these actions UK banks have raised over £130bn of new capital and now have more than £600bn of high quality liquid assets. That substantial capital and huge liquidity gives banks the flexibility they need to continue to lend to UK businesses and households even during challenging times.
Moreover, as a backstop to support the functioning of the markets the Bank of England stands ready to provide more than £250bn of additional funds through its normal market operations. The Bank of England is also able to provide substantial liquidity in foreign currency if required. We expect institutions to draw on this funding if and when appropriate.
It will take some time for the UK to establish a new relationship with Europe and the rest of the world. So some market and economic volatility can be expected as this process unfolds, but we are well prepared for this. Her Majesty's Treasury and the Bank of England have engaged in extensive contingency planning and the chancellor and I have remained in close contact including through the night and this morning. The Bank of England will not hesitate to take additional measure as required, as markets adjust.

Nonetheless, share prices of the five largest British banks fell an average of 21% on the morning after the referendum.{{cite news|url=https://www.reuters.com/article/us-britain-eu-banks-idUSKCN0Z92G8|title=Britain's financial sector reels after Brexit bombshell|date=24 June 2016|newspaper=Reuters}} Shares in many other non-UK banks also fell by more than 10%.{{cite news|url=http://www.ft.com/cms/s/0/5dd775bc-39cc-11e6-9a05-82a9b15a8ee7.html |title=Bank shares plunge after Britons vote to leave the EU |newspaper=Financial Times |publisher=The Financial Times Limited |date=24 June 2016 |access-date=16 July 2016 |url-access=subscription }} By the end of Friday's trading, both HSBC and Standard Chartered had fully recovered, while Lloyds, RBS Group and Barclays remained more than 10% down.{{cite web|title=Google Finance|url=http://www.google.ca/finance?hl=en&gl=ca|date=24 June 2016}}

All of the Big Three credit rating agencies reacted negatively to the vote: Standard & Poor's cut the UK credit rating from AAA to AA, Fitch Group cut from AA+ to AA, and Moody's cut the UK's outlook to "negative".{{cite news|url=https://www.bbc.com/news/business-36644934|title=Ratings agencies downgrade UK credit rating after Brexit vote|work=BBC News|date=27 June 2016|access-date=5 July 2016}}

To increase financial stability, on 5 July the Bank of England released £150 billion in lending by reducing the countercyclical capital buffers that banks are required to hold.{{cite news|url=https://www.theguardian.com/business/2016/jul/05/bank-of-england-releases-150bn-pounds-risks-financial-stability|title=Bank of England releases £150bn of lending and warns on financial stability |author=Jill Trainor|date=5 July 2016|access-date=5 July 2016|newspaper=The Guardian}}

Fears of a fall in commercial property values led investors to begin redeeming investments in property funds, prompting Standard Life to bar withdrawals on 4 July, and Aviva followed suit the next day.{{cite news|url=https://www.theguardian.com/business/2016/jul/05/aviva-halts-trading-in-its-property-fund-brexit-standard-life|title=Aviva halts trading in its property fund as Brexit contagion spreads|newspaper=The Guardian|date=5 July 2016|access-date=5 July 2016|author=Sean Farrell and Graeme Wearden}} Other investment companies including Henderson Group and M&G Investments cut the amount that investors cashing in their funds would receive. In the following weeks, the suspension of redemptions by several companies was lifted, replaced by exit penalties, and the exit penalties were successively reduced.{{cite web|url=https://citywire.co.uk/money/aberdeen-cuts-property-fund-exit-charge/a934870|title=Aberdeen cuts property fund exit charge|author=Selin Bucak|date=21 July 2016|work=citywire.co.uk|access-date=31 August 2016}}

On 4 October 2016, the Financial Times assessed the potential effect of Brexit on banking. The City of London is world leading in financial services, especially in foreign exchange currency transactions, including euros.European Central Bank (July 2017) [https://www.ecb.europa.eu/pub/pdf/other/ecb.euro-international-role-201707.pdf?5155295783d0b744ab5aa5a85d8674c1 "The international role of the euro"]. European Central Bank. p. 28.Chatsworth Communications (6 April 2016) [http://www.chatsworthcommunications.com/londons-leading-position-as-a-usd-2-2-trillion-hub-for-fx-trading-would-be-harmed-by-a-brexit-according-to-poll-of-currency-market-professionals/ "London's leading position as a USD 2.2 trillion hub for FX trading would be harmed by a Brexit, according to poll of currency market professionals"] {{Webarchive|url=https://web.archive.org/web/20180922064031/http://www.chatsworthcommunications.com/londons-leading-position-as-a-usd-2-2-trillion-hub-for-fx-trading-would-be-harmed-by-a-brexit-according-to-poll-of-currency-market-professionals/ |date=22 September 2018 }}. Chatsworth Communications.{{cite web|title=The value of Europe's international financial centres to the EU economy|url=http://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Pages/value-europes-international-financial-centres-to-eu.aspx|date=6 July 2011|access-date=23 May 2015|publisher=City of London and TheCityUK|author=Europe Economics|archive-url=https://web.archive.org/web/20150525100706/http://www.cityoflondon.gov.uk/business/economic-research-and-information/research-publications/Pages/value-europes-international-financial-centres-to-eu.aspx|archive-date=25 May 2015|url-status=dead}}{{Cite web|url=https://www.bankofengland.co.uk/news/2017/december/approach-to-authorisation-and-supervision-of-international-banks-insurers-central-counterparties|title=The Bank of England's approach to the authorisation and supervision of international banks, insurers and central counterparties|publisher=Bank of England|access-date=2 March 2018|quote=Having a large financial sector brings substantial benefits to the UK. A deep and liquid financial market lowers the cost of finance to households and businesses. The financial services sector accounts for 7% of output and is a source of over 1 million jobs, two-thirds of which are outside London. It contributes around £70bn, or 11%, of annual tax revenues. The UK's financial sector also brings substantial benefits to EU households and firms, allowing them to access a broad range of services efficiently and reliably. UK-located banks underwrite around half of the debt and equity issued by EU companies. UK-located banks are counterparty to over half of the over-the-counter (OTC) interest rate derivatives traded by EU companies and banks. As many as 30 million EEA policyholders are insured through a UK-based insurer. Central counterparties (CCPs) located in the United Kingdom provide services to EU clients in a range of markets. UK-located asset managers account for 37% of all assets managed in Europe. Globally, the UK has the largest share of cross-border bank lending, foreign exchange trading and interest rate derivatives. It also has the second largest asset management industry and the fourth largest insurance industry in the world. This concentration of activity increases efficiencies in the provision of finance, which in turn support international trade and cross-border investment.}}{{cite web|url=https://www.europarl.europa.eu/RegData/etudes/BRIE/2016/587384/IPOL_BRI(2016)587384_EN.pdf|title=Brexit: the United-Kingdom and EU financial services|date=9 December 2016|publisher=Economic Governance Support Unit of the European Parliament|access-date=2 March 2018}} This position is enabled by the EU-wide "passporting" agreement for financial products. Should the passporting agreement expire in the event of a Brexit, the British financial service industry might lose up to 35,000 of its 1 million jobs, and the Treasury might lose 5 billion pounds annually in tax revenue. Indirect effects could increase these numbers to 71,000 job losses and 10 billion pounds of tax annually. The latter would correspond to about 2% of annual British tax revenue.{{cite news|url=https://www.ft.com/content/f60b2d44-8a51-11e6-8aa5-f79f5696c731|title=Claim 'hard Brexit' could cost UK£10bn in tax |newspaper=Financial Times |date=4 October 2016 |access-date=4 October 2016 |url-status=dead |archive-url=https://web.archive.org/web/20130819141428/https://|archive-date=19 August 2013 }}

By July 2016 the Senate of Berlin had sent invitation letters encouraging UK-based start-ups to re-locate to Berlin.{{cite web|work=The Guardian|url=https://www.theguardian.com/business/2016/jul/09/berlin-brexit-beckons-britains-startups-london-tech|title=Berlin is beckoning to Britain's startups. But will they leave London?|first=Philip|last=Oltermann|date=9 July 2016}} According to Anthony Browne of the British Banking Association, many major and minor banks may relocate outside the UK.{{cite news|url=https://www.bbc.co.uk/news/business-37743700|title=Banks poised to relocate out of UK over Brexit, BBA warns |work=BBC News |date=23 October 2016 |access-date=24 February 2017}}

Economists have warned that London's future as an international financial centre depends on whether the UK will obtain passporting rights for British banks from the European Union. If banks located in the UK cannot obtain passporting rights, they have strong incentives to relocate to financial centres within the EU.{{Cite journal|last=Eichengreen|first=Barry|date=7 January 2019|title=The international financial implications of Brexit|journal=International Economics and Economic Policy|volume=16|language=en|pages=37–50|doi=10.1007/s10368-018-0422-x|s2cid=159090073|issn=1612-4812}}{{Cite journal|last=Armour|first=John|date=1 March 2017|title=Brexit and financial services|journal=Oxford Review of Economic Policy|volume=33|issue=suppl_1|pages=S54–S69|doi=10.1093/oxrep/grx014|issn=0266-903X|doi-access=free}} According to John Armour, Professor of Law and Finance at Oxford University, "a 'soft' Brexit, whereby the UK leaves the EU but remains in the single market, would be a lower-risk option for the British financial industry than other Brexit options, because it would enable financial services firms to continue to rely on regulatory passporting rights."

But the situation may be different when it comes to the fund management industry, as British asset owners, notably UK pension funds, often constitute an incommensurate share of total turnover for German, French, Dutch and other Continental European asset managers.

This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting"). Research conducted by the World Pensions Council (WPC) shows that {{blockquote|"Assets owned by UK pension funds are more than 11 times bigger than those of all German and French pension funds put together […] If need be, at the first hint of threat to the City of London, Her Majesty's Government should be in a position to respond very forcefully."{{cite journal|title= Beyond Brexit: Britain, Europe and the Pension Wealth of Nations |url=https://www.academia.edu/26810948|journal=Pensions Age |date=July 2016 |page=44 |access-date=11 July 2016|last1=Firzli |first1=M. Nicolas J. }} }}

{{Over-quotation|section|date=April 2019}}

In July 2016, the IMF released a report warning that "'Brexit' marks the materialisation of an important downside risk to global growth", and that considering the current uncertainty as to how the UK would leave the EU, there was "still very much unfolding, more negative outcomes are a distinct possibility".{{cite news |author=Agence France Presse |title=UK must remain a close partner of EU after leaving the bloc to reduce economic turmoil, finance chiefs say in communique |url=https://www.theguardian.com/world/2016/jul/24/brexit-heightens-risks-to-global-economy-says-g20|newspaper=The Guardian |location=London, UK |access-date=25 July 2016}} In September 2018 the IMF stated that Brexit would probably, "entail costs", but a disorderly leaving could result in, "a significantly worse outcome". Christine Lagarde said, "Any deal will not be as good as the smooth process under which goods, services, people and capital move around between the EU and the UK without impediments and obstacles. Our projections assume a timely agreement with the EU on a broad free-trade pact and a relatively smooth Brexit process after that. A more disruptive departure will have a much worse outcome. Let me be clear: compared with today's smooth single market, all the likely Brexit scenarios will have costs for the UK economy, and to a lesser extent for the EU as well. The larger the impediments to trade in the new relationship, the costlier it will be." Lagarde also said a "disorderly" or "crash" Brexit would have many results, including cuts to growth, a worsened deficit and depreciation of sterling, causing the size of the UK economy to be reduced. She added, "The larger the impediments to trade in the new relationship, the costlier it will be." Lagarde was asked if she predicted any positives from Brexit, Lagarde said, "I see a lot of negatives. If all the uncertainties were removed it would be better. It is bad for the economy to have this amount of uncertainty."[https://www.bbc.co.uk/news/business-45546785 No-deal Brexit would hit UK economy, says IMF] BBC 17 September 2018[https://www.theguardian.com/business/2018/sep/17/imf-christine-lagarde-theresa-may-no-deal-brexit-uk-economy IMF chief highlights recession risk of no-deal Brexit] The Guardian 17 September 2018

Held in late July 2016 in Chengdu, China this summit of finance ministers of 20 major economies warned that the UK's planned departure from the European Union was adding to uncertainty in the global economy and urged that the UK should remain close to the European Union to reduce turmoil. While the G20 agreed that other world factors, including terrorist acts, were creating problems, Brexit was at the forefront of their concerns.

In interviews while attending the G20 Summit, Philip Hammond, the UK's recently appointed Chancellor of the Exchequer, said the country would attempt to minimise uncertainty by explaining in the near future "more clearly the kind of arrangement we envisage going forward with the European Union". He emphasised that "the uncertainty will only end when the deal is done" but hoped that the UK and the EU would be able to announce some agreement by late 2016 as to how the exit would be staged. Hammond also reiterated previous Government comments indicating that steps would be taken to stimulate the economy including tax cuts or increased spending, though without specifics. The UK was also planning to increase bilateral trade with China, he told the BBC. According to Hammond, "Once we are out of the European Union then I have no doubt on both sides we will want to cement that relationship into a firmer structure in a bilateral way that's appropriate."{{cite news |last=Szu |first=Ping Chan |date=24 July 2016 |title=G20: Chancellor eyes clarity on Brexit deal 'later this year' as vote raises global risks |url=https://www.telegraph.co.uk/business/2016/07/24/g20-chancellor-eyes-clarity-on-brexit-deal-later-this-year-as-vo/|newspaper=The Telegraph |location=London, UK |access-date=25 July 2016}}

Although he was not addressing only the UK's departure from the EU, Mark Carney, chair of the Financial Stability Board (and Governor of the Bank of England), sent a letter in late July 2016 to Finance Ministers attending the G20 Summit and to Central Bank Governors about the difficulties the global economy had weathered (including the effects of Brexit) and the steps the FSB was taking.{{cite web |url=https://www.theasianbanker.com/press-releases/fsb-chair-updates-g20-finance-ministers-and-central-bank-governors-on-progress-in-advancing-the-fsb%E2%80%99s-2016-priorities|title=FSB Chair updates G20 Finance Ministers and Central Bank Governors on progress in advancing the FSB's 2016 priorities |author= |date=24 July 2016 |website=The Asian Banker |access-date=25 July 2016 |quote=The letter outlines the progress the FSB is making in advancing its priorities for 2016}} The letter indicated that the financial system had "continued to function effectively" in spite of the "spikes in uncertainty and risk aversion", confirming that "this resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms." He emphasised the value of specific reforms that had been implemented by the Financial Stability Board stating that these had "dampened aftershocks from these events [world crises] rather than amplifying them". He expressed confidence in the FSB's strategies as follows: "This resilience in the face of stress demonstrates the enduring benefits of G20 post-crisis reforms."

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• {{Cite AV media| publisher = Financial Times| people = Garrahan, Daniel| title = The Brexit effect: how leaving the EU hit the UK| series = FT Film| accessdate = 2022-10-25| date = 2022| url = https://www.youtube.com/watch?v=wO2lWmgEK1Y}}

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Category:Mark Carney

Category:Consequences of the 2016 United Kingdom European Union membership referendum

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