"In a June 23, 2016 referendum, a majority of British voters supported the United Kingdom (UK) leaving the European Union (EU), stunning global financial markets that expected the vote to fail (see CRS [Congressional Research Service] Insight IN10513, United Kingdom Votes to Leave the European Union). In the immediate aftermath: 1) Some equity markets fell by as much as 7% in value (the Dow Jones industrial average fell by 600 points, or 3.5%), erasing nearly $3 trillion in equity value 2) The British pound depreciated against other major currencies by its largest amount in one day; the U.S. dollar, the yen, and other currencies appreciated sharply 3) Some London-based American, European, and other foreign banks began reconsidering their UK presence due to concerns that Brexit will jeopardize their EU 'passport' status that allows them to operate throughout the EU 4) Standard & Poor's and Fitch downgraded UK sovereign debt, Fitch downgraded Bank of England debt, and Moody's downgraded the UK's credit outlook status, raising borrowing costs and risks of potential domino effects onto other credit ratings 5) Questions arose about London's continued status as the largest global financial center and the prospects of increased global economic risks. [...] Financial markets likely will be volatile over the near term as the UK and the EU sort through these issues. Much uncertainty also looms over the UK's trade and economic arrangements and the corresponding legal and regulatory frameworks. Trade is equivalent to about 60% of the UK economy, largely due to reduced trade barriers with the EU through the EU's Single Market. The UK is the second largest EU economy after Germany."
CRS Insight, IN10517
Federation of American Scientists: http://www.fas.org/sgp/crs/index.html