On the Causes of Brexit

We analyse the voting pattern in the June 23rd referendum on the continued participation of the United Kingdom in the European Union and evaluate the reasons for the results. We find that regions where GDP per capita is low, a high proportion of people have low education, a high proportion is over the age of 65 and there is strong net immigration are more likely to be apprehensive of the E.U., consider the enlargement of the E.U. as having gone too far, be suspicious of immigrants and not want them as neighbours and, most importantly, to vote for Brexit. The fear of immigration does not seem to be fully justified in terms of the literature on the labour market effects of immigrants in the UK. Looking at the response of the sterling exchange to poll numbers we find that investors appear to view Brexit as a negative event.