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

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.