EU leaders tell Britain to exit swiftly, market rout halts
European leaders told Britain on Tuesday to act quickly to resolve the political and economic chaos unleashed by its vote to leave the European Union, a move the International Monetary Fund(IMF) said could put pressure on global growth.
Financial markets recovered slightly after the result of Thursday's referendum wiped a record $3 trillion off global shares and sterling fell to its lowest level in 31 years against the dollar, but trading was volatile and policymakers said they would take all necessary measures to protect their economies.
British Finance Minister George Osborne, whose attempt to calm markets had fallen on deaf ears on Monday, said the country would have to cut spending and raise taxes to stabilise the economy after a third credit ratings agency downgraded its debt.
Firms have announced hiring freezes and possible job cuts, despite voters' hopes the economy would thrive outside the European Union.
European countries are concerned about the impact of the uncertainty created by Britain's vote to leave on the 27 other European Union member states. There is little idea of when, or even if, the country will formally declare it is quitting.
“The process for the United Kingdom to leave the European Union must start as soon as possible,” French President Francois Hollande said. “I can't imagine any British government would not respect the choice of its own people.”
European Commission President Jean-Claude Juncker sent a similar message as he prepared for talks with British Prime Minister David Cameron before an European Union summit in Brussels, although he did not expect an immediate move.
“We cannot be embroiled in lasting uncertainty,” Juncker told the European Parliament, which he interrupted to ask British members of the assembly who campaigned to leave the European Union why they were there.
Cameron, who called the referendum and tendered his resignation when it became clear he had failed to persuade Britain to stay in the European Union, says he will let his successor declare the country's exit formally.
His Conservative Party has been split for years into pro- and anti-EU camps and the opposition Labour Party sank deeper into chaos on Tuesday.
Labour lawmakers passed a vote of no-confidence in party leader Jeremy Corbyn by 172 to 40, accusing him of failing to win over traditional supporters during the referendum campaign.
The lawmakers fear that a similar failure at the next general election, due in 2020, will lead to Labour suffering a near wipe out as it suffered in Scotland last year.
However, the confidence vote does not automatically trigger a leadership election and Corbyn, who says he enjoys strong grassroots support, refused to quit.
“I was democratically elected leader of our party for a new kind of politics by 60 per cent of Labour members and supporters, and I will not betray them by resigning,” he said.
Arriving for the European Union summit, Cameron said: “I'll be explaining that Britain will be leaving the European Union but I want that process to be as constructive as possible, and I hope the outcome can be as constructive as possible.
Holding out hope of maintaining good relations with other European countries, he said Britain wanted “the closest possible relationship in terms of trade and cooperation and security.
Because that is good for us and that is good for them.” His party says it aims to choose a new leader by early September. But those who campaigned for Britain's leave vote have made clear they hope to negotiate a new deal for the country with the European Union before triggering the formal exit process.
European leaders have said that is not an option.
“No notification, no negotiation,” Juncker said.
After Cameron has addressed European Union leaders on Tuesday evening, they will meet the next day to discuss Brexit without him.
Leave campaigners in Britain including Boris Johnson, a likely contender to replace Cameron, suggest the country can retain access to the European single market and curb immigration, but those goals are mutually incompatible under European Union rules.
German Chancellor Angela Merkel said Britain would not be able to “cherry-pick” parts of the European Union, such as access to the single market, without accepting principles such as freedom of movement when it negotiates its exit from the bloc.
“I can only advise our British friends not to fool themselves ... in terms of the necessary decisions that need to be made in Britain,” she told parliament in Berlin.
European Union lawmakers want Cameron to trigger the exit process at a dinner on Tuesday, but an European Union official said that was unrealistic given the political chaos in London.
The European Parliament jeered when Nigel Farage, the leader of Britain's eurosceptic UKIP party, said in a scathing speech that Europe had deceived its population and Britain would be its “best friend” if it agreed to extend a tariff-free trade deal.
Germany's financial market regulator delivered a double blow to the City of London, saying it could not host the headquarters of a planned European stock exchange giant after Britain leaves the EU, and could not remain a centre for trading in euros.
Fitch joined other credit ratings agencies in downgrading its sovereign debt on Monday, and Osborne said Britain faces tax rises and spending cuts.
“We are going to have to show the country and the world that the government can live within its means,” Osborne, who campaigned to stay in the EU, told BBC radio.
Financial markets recovered slightly after the result of Thursday's referendum wiped a record $3 trillion off global shares and sterling fell to its lowest level in 31 years against the dollar, but trading was volatile and policymakers said they would take all necessary measures to protect their economies.
British Finance Minister George Osborne, whose attempt to calm markets had fallen on deaf ears on Monday, said the country would have to cut spending and raise taxes to stabilise the economy after a third credit ratings agency downgraded its debt.
Firms have announced hiring freezes and possible job cuts, despite voters' hopes the economy would thrive outside the European Union.
European countries are concerned about the impact of the uncertainty created by Britain's vote to leave on the 27 other European Union member states. There is little idea of when, or even if, the country will formally declare it is quitting.
“The process for the United Kingdom to leave the European Union must start as soon as possible,” French President Francois Hollande said. “I can't imagine any British government would not respect the choice of its own people.”
European Commission President Jean-Claude Juncker sent a similar message as he prepared for talks with British Prime Minister David Cameron before an European Union summit in Brussels, although he did not expect an immediate move.
“We cannot be embroiled in lasting uncertainty,” Juncker told the European Parliament, which he interrupted to ask British members of the assembly who campaigned to leave the European Union why they were there.
Cameron, who called the referendum and tendered his resignation when it became clear he had failed to persuade Britain to stay in the European Union, says he will let his successor declare the country's exit formally.
His Conservative Party has been split for years into pro- and anti-EU camps and the opposition Labour Party sank deeper into chaos on Tuesday.
Labour lawmakers passed a vote of no-confidence in party leader Jeremy Corbyn by 172 to 40, accusing him of failing to win over traditional supporters during the referendum campaign.
The lawmakers fear that a similar failure at the next general election, due in 2020, will lead to Labour suffering a near wipe out as it suffered in Scotland last year.
However, the confidence vote does not automatically trigger a leadership election and Corbyn, who says he enjoys strong grassroots support, refused to quit.
“I was democratically elected leader of our party for a new kind of politics by 60 per cent of Labour members and supporters, and I will not betray them by resigning,” he said.
Arriving for the European Union summit, Cameron said: “I'll be explaining that Britain will be leaving the European Union but I want that process to be as constructive as possible, and I hope the outcome can be as constructive as possible.
Holding out hope of maintaining good relations with other European countries, he said Britain wanted “the closest possible relationship in terms of trade and cooperation and security.
Because that is good for us and that is good for them.” His party says it aims to choose a new leader by early September. But those who campaigned for Britain's leave vote have made clear they hope to negotiate a new deal for the country with the European Union before triggering the formal exit process.
European leaders have said that is not an option.
“No notification, no negotiation,” Juncker said.
After Cameron has addressed European Union leaders on Tuesday evening, they will meet the next day to discuss Brexit without him.
Leave campaigners in Britain including Boris Johnson, a likely contender to replace Cameron, suggest the country can retain access to the European single market and curb immigration, but those goals are mutually incompatible under European Union rules.
German Chancellor Angela Merkel said Britain would not be able to “cherry-pick” parts of the European Union, such as access to the single market, without accepting principles such as freedom of movement when it negotiates its exit from the bloc.
“I can only advise our British friends not to fool themselves ... in terms of the necessary decisions that need to be made in Britain,” she told parliament in Berlin.
European Union lawmakers want Cameron to trigger the exit process at a dinner on Tuesday, but an European Union official said that was unrealistic given the political chaos in London.
The European Parliament jeered when Nigel Farage, the leader of Britain's eurosceptic UKIP party, said in a scathing speech that Europe had deceived its population and Britain would be its “best friend” if it agreed to extend a tariff-free trade deal.
Germany's financial market regulator delivered a double blow to the City of London, saying it could not host the headquarters of a planned European stock exchange giant after Britain leaves the EU, and could not remain a centre for trading in euros.
Fitch joined other credit ratings agencies in downgrading its sovereign debt on Monday, and Osborne said Britain faces tax rises and spending cuts.
“We are going to have to show the country and the world that the government can live within its means,” Osborne, who campaigned to stay in the EU, told BBC radio.
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