Brexit and the Euro

Nauro Campos and Corrado Macchiarelli

LEQS – LSE 'Europe in Question' Discussion Paper Series from European Institute, LSE

Abstract: The year 2019 marks the 20th anniversary of the euro as well as Brexit, the expected exit of the United Kingdom from the European Union. This paper examines the relationship between Brexit and the stability of the euro area. We look at stability from the perspective of the distance between core and periphery groups of countries which, we show, is mainly determined by the level of synchronization of economic activity among them. We provide new evidence that the UK economy, since 1990, has become significantly more integrated with the EU economy. The UK moved from being in the periphery before 1990 to being in the core afterwards. We also provide evidence that the level of business cycles synchronization of the UK economy with the EU has had the highest, among all countries, variability over time. We conclude with some policy implications from Brexit for the stability of the euro area.

Keywords: European Monetary Union; Eurozone; Core-periphery (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-eec, nep-int, nep-mac and nep-mon
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Citations: View citations in EconPapers (6)

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Working Paper: Brexit and the Euro (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eiq:eileqs:154

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