After Brexit pp 351-384 | Cite as

Policy Uncertainty and Spillovers into International Financial Markets

  • Ansgar Belke


This chapter evaluates the effect of the uncertainty triggered by Brexit on the UK and international financial markets. Due to the strong linkages of financial markets, the uncertainty created by Brexit should impact several national financial markets. While analysing the effect of Brexit on financial markets, we might also gain some knowledge about the expected size of the economic effect outside the UK and which other countries might be concerned. Therefore, we report own estimates of time-varying interactions between UK policy uncertainty, mostly ascribed to uncertainty about Brexit, and UK financial market volatilities, trying to identify the direction of causation. Additionally, we use two measures of the perceived likelihood of Brexit before the referendum: daily data published by Betfair and results of polls issued by Bloomberg. Based on these datasets, we report quantitative evaluations of the effect of Brexit on several financial variables. We argue that Brexit-induced policy uncertainty will cause further instability in important financial markets and will possibly damage the real economy in the UK and further countries especially the Euro area periphery countries.


Brexit Financial markets Spillovers Uncertainty 



I am grateful for valuable research assistance to Sarah Piwonski.


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Copyright information

© The Author(s) 2017

Authors and Affiliations

  • Ansgar Belke
    • 1
    • 2
    • 3
  1. 1.University of Duisburg-EssenEssenGermany
  2. 2.CEPSBrusselsBelgium
  3. 3.IZABonnGermany

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