EU leaders to hold crisis talks as pound sinks

A still image from video shows Britain's Prime Minister David Cameron speaking to the House of Commons about the recent EU referendum.
A still image from video shows Britain's Prime Minister David Cameron speaking to the House of Commons about the recent EU referendum.PHOTO: REUTERS

Cameron says Britain will push for strongest possible economic links with neighbours

LONDON • British Prime Minister David Cameron was set to join his European Union counterparts today for a crisis meeting on Britain's decision to leave the 28-member bloc, as the pound plunged and European shares wilted for a second trading session.

In his first address to Parliament since Thursday's referendum, Mr Cameron said the vote would be accepted and that Britain will push for the strongest possible economic links with its European neighbours.

Nerves have become increasingly frayed over the Brexit vote, with markets, businesses and world leaders increasingly anxious to put a floor under the market turmoil, with calls for strong leadership to manage Britain's exit.

The pound fell more than 3 per cent to a fresh 31-year low. An index of European bank shares fell 7.5 per cent by late last night Singapore time, taking the decline in the last two trading days to around 20 per cent, equating to a loss of €168 billion (S$251 billion) in market capitalisation. Royal Bank of Scotland shares fell 23 per cent while Barclays shed 18 per cent.

 

EU leaders will meet at a summit in Brussels today on the crisis and again tomorrow without Mr Cameron.

The leaders of Germany, France and Italy also met yesterday, with Italian Prime Minister Matteo Renzi saying Europe must move quickly to tackle Britain's exit, and that there was no time to lose.

"What's missing today is an awareness of the gravity of the situation," he told the Italian Senate ahead of meeting his German and French counterparts.

German Chancellor Angela Merkel said yesterday that she did not want to pressure Britain to slow or accelerate its exit from the EU but she also made clear that informal discussions on Brexit could not begin until London applies to leave.

She had "some understanding" for Britain taking time to analyse its situation but added: "We can't have a permanent impasse."

After a weekend of political turmoil, Mr Cameron tried to take control of the situation after accusations of disarray in his government. He urged his top ministers to get on with business and has set up a new unit to help lay the groundwork for a Brexit.

And in a step to try to reassure markets, the leaders of the Leave campaign sought to ease concerns about the country's uncertain economic future by giving public backing to Bank of England governor Mark Carney and Finance Minister George Osborne.

Speaking before markets opened yesterday, Mr Osborne declared "You should not underestimate our resolve" to limit an "inevitable adjustment" in the economy.

But while Mr Cameron tries to restore calm, Britain's opposition Labour Party remains in turmoil, with more than half the shadow Cabinet quitting after the Brexit vote and party leader Jeremy Corbyn under increasing pressure to step aside.

REUTERS, AGENCE FRANCE-PRESSE, BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on June 28, 2016, with the headline 'EU leaders to hold crisis talks as pound sinks'. Print Edition | Subscribe