UK Chancellor of the Exchequer, George Osborne made his first statement since the UK’s EU referendum this morning in a bid to stabilise markets. He stressed that the UK government is “ready to deal with the consequences” and that the UK economy is strong.
Despite these reassuring words, he also heeded that there will need to be “a period of adjustment” and that “there is going to be an impact on public finances”, although any new budget would be a job for the new government.
He agreed with the decision to delay triggering Article 50 of the EU Treaties – which sets out the process for leaving the EU.
Cable has continued to plummet today trading at fresh 31 year lows. It is currently holding firmly below 1.32 at 1.31647, whilst the FTSE 100 is currently down over 2% pushing the 6000 level at 6003.57.
Former London Mayor and leading Leave campaigner Boris Johnson MP yesterday wrote in his weekly Daily Telegraph column “I cannot stress too much that Britain is part of Europe, and always will be. There will still be intense and intensifying European cooperation and partnership in a huge number of fields: the arts, the sciences, the universities, and on improving the environment.
EU citizens living in this country will have their rights fully protected, and the same goes for British citizens living in the EU” – while also suggesting that the UK would have a points-based system for EU migrants. He goes on to argue, “As the German equivalent of the CBI – the BDI – has very sensibly reminded us, there will continue to be free trade, and access to the single market.”
German Chancellor Angela Merkel seems to be taking quite a passive approach to the situation given the market impact seen across the board in European Banks since Thursday. She said that there was “no need to be particularly nasty [to the UK] in any way in the negotiations. They must be conducted properly.” But did add that the exit process “shouldn’t take forever, and that she would not fight for a short timeframe.”
This is in stark contrast to French President François Hollande, however, who bullishly said, “What was once unthinkable has become irreversible.”
A number of experts are now predicting a cut in interest rates from the BoE following the successful ‘Brexit’ vote from their current record low of 0.5%. Markets are now pricing in a 15% chance of negative rates within a year.