The U.K.’s surprising June 23 referendum vote to leave the European Union (Brexit) caused dramatic moves in global capital markets. In the days that followed, politicians from around the world offered a wide range of comments, from support for Brexit and independence movements in other European nations to anger and threats. In the U.K. protesters against Brexit took to the streets, while a string of political resignations left a leadership void.
Despite the quick and sometimes virulent reactions, the Brexit vote is just the beginning of what is likely to be a multi-year process to disentangle the U.K. from the EU. In the meantime, the rest of the world is still trying to figure out how to reinvigorate global economic growth (Chart 1). Seven years after the low point of the great financial crisis, the unfolding drama in Europe’s political structure is just one more complication in the effort to boost global growth, strengthen the global financial system, and lift global living standards.