So far the euro area has weathered the fallout from the referendum outcome with encouraging resilience, also thanks to the preparations of central banks and supervisors on both sides of the Channel. The outcome of the vote led to a pronounced bout of heightened risk aversion, but the market reaction was short-lived and asset prices largely recovered in the weeks thereafter.
Also, the euro area Economic Sentiment Indicator and the Purchasing Managers’ Index, which declined in August, recovered in September and October. In the United Kingdom, economic activity has also remained fairly resilient on the back of robust consumption growth. At the same time, uncertainty appears to have weighed on investment and the pound sterling.