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The Impact of the British Vote in Favour of a Brexit on the German Economy in 2016/17

Author

Listed:
  • Christian Grimme
  • Magnus Reif
  • Timo Wollmershäuser

Abstract

The decision taken by the British people on 23 June 2016 to leave the European Union has led to immediate and strong reactions in the financial markets: stock market prices plunged worldwide, the British pound lost value substantially and financial market volatility rose. In the wake of the referendum a growing number of questions were raised about the impact of the Brexit vote on Germany’s economy. This article shows that Brexit will put a slight damper on Germany‘s economy this year and in 2017, since the downturn in the economy in Great Britain and the depreciation of the British pound will negatively impact foreign trade and increase the uncertainty surrounding German investments. However, growth losses of less than a tenth of a percentage point in 2016 and up to two tenths of a percentage point in 2017 will be small, and will therefore not threaten the robust upturn that has been seen for over three years in Germany.

Suggested Citation

  • Christian Grimme & Magnus Reif & Timo Wollmershäuser, 2016. "The Impact of the British Vote in Favour of a Brexit on the German Economy in 2016/17," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(13), pages 38-43, July.
    • Handle: RePEc:ces:ifosdt:v:69:y:2016:i:13:p:38-43
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    References listed on IDEAS

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    Cited by:

    1. Timo Wollmershäuser & Wolfgang Nierhaus & Nikolay Hristov & Dorine Boumans & Johanna Garnitz & Marcell Göttert & Christian Grimme & Stefan Lauterbacher & Robert Lehmann & Wolfgang Meister & Magnus Rei, 2016. "Ifo Economic Forecast 2016–2018: Germany’s Robust Economy Faces a Year of Uncertain International Economic Policy," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(24), pages 28-73, December.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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