Drivers of Brexit: More social than economic – Goldman Sachs

Research Team at Goldman Sachs, suggests that the outcome of the UK’s recent referendum on EU membership came as a surprise to most observers (including ourselves).

Key Quotes

“In exploring the causes of this outcome, we find that the recent rise of Euroscepticism in the UK has been driven by attempts of the ‘socially conservative’ to safeguard the cultural status quo. This view dominates the main competing explanation, namely that the referendum outcome reflects the frustrations of those ‘economically left behind’ by globalisation and technological change.

More specifically, we find that economic factors – income, growth, inequality and unemployment – are not (very) important in explaining the rise of Euroscepticism.  By contrast, factors we associate with ‘social conservatism’ – greater ‘cultural homogeneity’, an older population and concerns about increasing diversity – are associated with stronger Euroscepticism.

Nor does income explain the variation in the impact of social factors across districts. An older or more homogeneous population has the same effect on Euroscepticism (as reflected in voting in recent European Parliament elections) whether average income in the district being examined is either high or low. Yet the effect of these social drivers is magnified by de-industrialisation. In areas that have de-industrialised over the past 30 years, the impact of cultural homogeneity on Euroscepticism is stronger, while the impact of having an older population is weaker.”