Britain's Treasury chief sought Monday to ease concerns about the vote to leave the European Union, saying the economy is as strong as it could be to face the uncertainty — even as a survey showed many companies are looking to move business out of the country.
In his first public appearance since Thursday's referendum, George Osborne stressed that Britain's economy is in a far better position than it was at the start of the 2008 financial crisis. "It will not be plain sailing in the days ahead," he said. "But let me be clear. You should not underestimate our resolve. We were prepared for the unexpected."
The leaders of Germany, Italy and France will be huddling in Berlin to discuss the vote, trying to hone a common message that negotiations need to get underway quickly on the exit so as not to continue the uncertainty.
Questions remain about exactly how the exit would happen, and German Chancellor Angela Merkel's spokesman said Monday that there will be no informal talks on conditions until Britain invokes Article 50 of the EU treaty, which will trigger the process for leaving. Prime Minister David Cameron has said he will resign and his successor, to be chosen by the fall, should be the one to navigate that process. In the first direct reflection of such uncertainty on business confidence, a leading business group says 20 percent of its members plan to move some of their operations outside of the U.K. The Institute of Directors said Monday that a survey of its 1,000 members showed that three out of four believe that Britain's exit from the EU, known as Brexit, will be bad for business. The pound hit a new 31-year record low, dropping another 3.3 percent to $1.3227. Stock markets also declined across Europe.
Stocks in several British companies took a beating. Banks were particularly hard hit, as they are considered a mirror on the larger economy. Shares in Royal Bank of Scotland, once the world's largest bank, fell some 26 percent in morning trading.
Osborne pledged not to impose a new austerity budget — even though he said during the campaign that one would be necessary if voters chose to leave the EU. He said another budget would be the task of Cameron's successor. Osborne also said he had been working closely with Bank of England Governor Mark Carney, fellow finance ministers and international organizations over the weekend. "We are prepared for whatever happens," he said. In another move to cushion market reaction, Osborne stressed that only Britain can invoke Article 50. The U.K. "should only do that when there is a clear view about what new arrangement we are seeking with our European neighbors," he said.
Cameron has chaired an emergency Cabinet meeting Monday. U.S. Secretary of State John Kerry is visiting Brussels and London to address the fallout from the vote. Political turmoil has roiled Britain since the vote as leaders of the government and opposition parties grapple with the question of how precisely the U.K. will separate from the other 27 nations in the bloc.
Opposition leader Jeremy Corbyn is also facing upheaval within his Labour Party after more than 20 advisers quit his inner circle over that past two days. Corbyn said he will not resign, and has appointed lawmakers loyal to him to fill the vacated posts. He insists he will run in any new leadership contest, and said he has the support of the party's grassroots. Many Labour lawmakers accuse Corbyn of running a lukewarm campaign in support of remaining in the EU. They also fear the left-winger cannot win a general election, which could come well before the scheduled date of 2020, as whoever replaces Cameron may call an early election to solidify a mandate before negotiating Britain's EU exit.
The vote is also causing a political schism in the U.K. overall. Scotland's First Minister Nicola Sturgeon said she would "consider" whether to advise the Scottish Parliament to use its power to try to prevent Britain from leaving the EU. Some 62 percent of Scots voted to remain in the bloc. Scottish lawmakers might be able to derail Britain's departure by withholding "legislative consent," she said.