Are UK industries resilient in dealing with uncertainty? The case of Brexit

Given the European Union (EU)’s central role in regulating various sectors, the decision to leave poses profound questions for UK industries in upheaval. This paper examines –at sectoral level– the dynamics of stock prices surrounding the announcement of the UK’s EU membership referendum on 24 June 2016. Assessing seven sectors of British stock index, we show that the Brexit had a significant impact on the valuation of UK companies. While all industries face increasing uncertainty, the referendum outcome had varying sectoral effects. Specifically, the responses of banks and financial services, defense and airlines, real estate and technology to the Brexit event were even more severe than the reactions of oil and gas, pharmaceuticals and consumer goods. The lack of opportunity to benefit from the European passporting rules to establish businesses, to access to EU’s Research and Development funds and to hire the skilled workers have been offered to explain the harmful impact of Brexit uncertainty on UK share sectors