Brexit Vote Causes Alarm Abroad as Ripples Spread

Despite the international expressions of concern, officials unable to agree about what to do next and respite from the uncertainty is unlikely for months, at the very least.

Traders from BGC, a global brokerage company in London's Canary Wharf financial centre react as European stock markets open after the Brexit vote, June 24, 2016.
Russell Boyce, Reuters

REUTERS - Britain plunged deeper into political crisis on Sunday after its vote to leave the European Union, spreading further confusion and uncertainty to the continent, where officials were unable to agree about what to do next.

The turmoil also caused alarm around the world; China's finance minister said fallout from Thursday's referendum "will cast a shadow over the global economy" while a senior official in Tokyo warned of the danger of "speculative, violent moves" in currencies.

In Britain, open political conflict spread from the ruling Conservatives to the opposition Labour party, where senior lawmakers withdrew support for their leader after traditional backers rejected the party's pro-EU stand in droves.

Splits widened across the nation. Over 3 million Britons signed a petition demanding a re-run of the referendum, with the number climbing by the hour, and an opinion poll showed a large majority of Scots now want to break with the United Kingdom.

Scotland's leader promised she would do whatever it takes to keep her strongly pro-EU country in the bloc, including potentially vetoing legislation on a British exit from the world's biggest single market.

But French President Francois Hollande declared there was no going back on "Brexit".

"What was once unthinkable has become irreversible after the vote of a majority of the British people," he said during the inauguration of a World War Two memorial in central France.

Hollande called for France and Germany to use their strong friendship to seize the initiative, warning that "separated, we run the risk of divisions, dissension and quarrels".

He and Chancellor Angela Merkel discussed the issue by phone and an aide said they were in "full agreement on how to handle the situation".

German Vice Chancellor Sigmar Gabriel also took a tough line on the EU's future ties with London, although Merkel had been more emollient on Saturday, calling for clear-headed negotiations with a "close partner".

"We will not hold talks about what the EU can still offer the Britons to keep them in," Gabriel said.

Knee-jerk reaction

British Prime Minister David Cameron resigned on Friday after voters ignored his appeals to stay in the EU by 52 to 48 percent, delivering the biggest blow since the war to the European project of forging greater unity.

Cameron, however, left the task of formally notifying the EU of Britain's intention to leave to his successor, who is unlikely to be in office for about three months. That signals a long period of limbo. He will meet the other 27 EU leaders at a summit in Brussels on Tuesday.

Sterling fell as much as 10 percent against the dollar on Friday to levels last seen in 1985, while more than $2 trillion was wiped off the value of world stocks. The weekend gave some respite for markets, but apprehension grew as Monday's reopening approached.

In China, Finance Minister Lou Jiwei expressed his concerns about the threat to the global economy.

"It's difficult to predict now," he said at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. "The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view."

Central banks promised through their global forum to do as much as they could to contain market uncertainty.

Already, the Bank of England and some other of the world's biggest central banks have offered financial backstops in the hope of calming investors.

Japan contemplated official action on the currency market. "Speculative, violent moves have extremely negative effects," said Tomomi Inada, policy chief of the ruling LDP party, according to the Nikkei daily. "If necessary, the government should not hesitate to respond, including currency intervention."

South Korea also expressed concern while Hong Kong's finance chief promised vigilance.

No respite

The United States - which during campaigning made clear it wanted Britain to stay in the EU - also showed signs of unease. Secretary of State John Kerry will visit Brussels and London on Monday. A senior U.S. official said he would stress the importance of other EU members not following Britain to further weaken the bloc.

Despite the international expressions of concern, respite from the uncertainty is unlikely for months, at the very least.

Cameron has offered to remain as a caretaker, but refused to invoke Article 50 of the EU's Lisbon Treaty, which allows for two years of exit negotiations. That duty will lie with his successor, who is due to be elected by his Conservative Party sometime before its annual conference in October.

The man widely tipped as the next prime minister is former London mayor Boris Johnson, the most prominent member of the campaign to leave the EU.

Cameron's Conservatives have been at war with each other for years over whether to quit the EU. But the vote to leave a bloc that Britain joined 43 years ago also pushed Labour into chaos.

Labour leader Jeremy Corbyn sacked a top colleague on Sunday, setting off a wave of resignations from his "shadow" cabinet. Dismissed foreign affairs spokesman Hilary Benn called for Corbyn, who was elected last year largely by left-wing party members and supporters, to go. "He is a good and decent man but he is not a leader," Benn told BBC television.

Corbyn's critics accuse him of campaigning only half-heartedly for a "Remain" vote in the referendum, and of failing to win over traditional Labour voters who were more receptive to the anti-EU message of the U.K. Independence Party.

No lying down

The referendum has re-energised support for Scotland, which voted overwhelmingly to remain in the EU, to break away from the United Kingdom instead.

An opinion poll in the Sunday Post said 59 percent of Scots backed independence, rocketing from the 45 percent who voted for it in a referendum in 2014.

Scottish First Minister Nicola Sturgeon has said a fresh independence referendum is possible.

Under the U.K.'s complex arrangements to devolve some powers to Scotland, Wales and Northern Ireland, any legislation before the Westminster parliament to withdraw Britain from the EU may also have to gain consent from the three devolved parliaments.

Asked whether she would consider asking the Scottish parliament to block a motion of legislative consent, Sturgeon said: "Of course."

However, a spokesman for Sturgeon later said that there was legal debate over whether a lack of Scottish consent would be enough to hold up the withdrawal, and that the Scottish government expected their London counterparts to say it was not needed.

Beyond Scotland, signs are growing that not all the 16 million Britons who voted to stay in the EU are willing to take the result lying down. Backing for the online petition demanding a second vote more than doubled in 24 hours, with the number of signatures nearing 3.5 million on Sunday evening.

The petition, posted on parliament's website before the referendum, said there should be another vote if the outcome was close on a turnout of less than 75 percent - three points above Thursday's figure.

It will have to be considered for debate by lawmakers, but has no legal force and its backers compare with the 17.4 million who voted "Leave."