The result of the U.K. referendum on European Union membership has been a surprise and massive shock to so-called “expert” opinion. And not just to academic opinion: The betting markets, which are supposed to be inhabited by experts at setting odds, were assigning just a one-in-seven probability to a majority for “leave” on the eve of the vote.How then are we to understand this surprising outcome?
In my view, understanding it starts with acknowledging the dismal performance of the British economy, which was arguably the real underlying subject of the referendum vote. CONT.
Barry Eichengreen, UC Berkeley