By Lili Bayer and Jacob L. Shapiro
July 22, 2016
In May, the British Chancellor of the Exchequer presented a report to Parliament outlining the short-term impacts of a vote to leave the European Union. According to the report, a vote to leave would cause “an immediate and profound economic shock,” pushing the U.K. into a recession and leading to a sharp rise in unemployment. The British Treasury was not alone in its fears: investment banks and consulting firms across the globe issued predictions of imminent doom. The Financial Times even reported that international banks were beginning to look at real estate in Frankfurt because London was no longer a suitable place to do business.
There was a general atmosphere of panic and hysteria leading up to the vote that exploded once it became clear that the “leave” campaign won. Global markets reeled and the British pound plunged to a 31-year low. The European Central Bank (ECB) issued a statement saying it “stands ready to provide additional liquidity, if needed, in euro and foreign currencies” and has “prepared for this contingency.” The Bank of England announced it would make £250 billion ($331 billion) of additional funds available to help stabilize markets. Headlines and stories abound at the immediate and profound impact Brexit would have on the British economy.
And then the doom didn’t materialize.