The unexpected vote for Brexit in the referendum of 23 June 2016 caused huge turbulence across the financial markets. The FTSE 250 index, which largely contains companies that are UK-focused, closed 6.96% down on Monday 27 June after dropping 7% on the Friday after the referendum. These were the biggest falls since the stock market crash in 1987 — known as ‘Black Monday’. The pound also fell to a 31-year low against the dollar, making imports — which are often priced in dollars — more expensive (Figure 1). UK companies also became a target for foreign takeovers, as they suddenly appeared cheaper to potential buyers.
Political crisis saw the resignation of Prime Minister David Cameron and turmoil in the Labour Party. New Prime Minister Theresa May said soon after her election:
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