Downloads
DP512: Brexit and the EuroAuthors
Dr Corrado Macchiarelli
External Authors
Campos, N F
Related Themes
Macro-Economic Dynamics and PolicyJEL Code
E32, E63, F02
Paper Category Number
512
The year 2019 marked the 20th anniversary of the establishment of the Euro. It was also the last full year before the UK formally left the European Union. This paper examines the relationship between the UK and the euro area. We look at the economic distance between core and periphery groups of countries which is driven by the level of synchronisation in economic activity. We provide new evidence that since 1990 the UK economy has become significantly more integrated with that of the EMU countries. The UK has moved from being in the periphery before 1990 to being part of the core over the following 30 years, despite not being part of the EMU. We also provide evidence that the level of business cycles synchronisation of the UK economy with the EU has had the greatest, among the EU countries, variability over time. We conclude with some policy implications arising from Brexit for the stability of the euro area. Specifically, while synchronisation might have increased the costs of Brexit, the UK exit from the EU represents much less of a threat to the stability of the euro area than the risk of a failure to further European economic integration via fiscal federalism and the banking union.
Related Blog Posts
Public Debt Sustainability and Fiscal Rules
Stephen Millard
Benjamin Caswell
05 Feb 2024
4 min read
Related Projects
Related News
Call for Papers: Lessons From Quantitative Easing & Quantitative Tightening
09 Feb 2024
1 min read
Related Publications
The Nature of the Inflationary Surprise in Europe and the USA
21 Mar 2024
Discussion Papers
Energy and Climate Policy in a DSGE Model of the United Kingdom
08 Mar 2024
Discussion Papers
Exploring Alternative Data Sources for Household Wealth Statistics
24 Jan 2024
Discussion Papers