European leaders in crisis meeting after Brexit shock

2016-06-25 07:41

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Brexit: Biggest currency swings since 2008 crisis - forex expert

2016-06-24 17:59

Foreign exchange broker Mark Braithwaite joined us over Skype on Friday to weigh in on Brexit's effect on the markets. He's also a South African expat living in London, and gives us a sense of how South African expats, and local Brits, are feeling. Watch. WATCH

Berlin, June 25, 2016 (AFP) -Founding EU members are to hold a crisis meeting Saturday on the future of the bloc after Britain's seismic vote to leave the union and the resignation of Prime Minister David Cameron.

As the "Brexit" vote sent global financial markets into freefall, Moody's cut Britain's credit rating outlook to "negative", saying the vote to pull out of the European Union could hurt its economic prospects.

After the shock result German Chancellor Angela Merkel and French President Francois Hollande led calls for the EU to reform in order to survive a traumatic divorce with Britain.

European leaders are anxious to ensure the transition is as painless as possible, with the foreign ministers of the six EU founding members gathering in Berlin on Saturday in the first of a series of crisis meetings over the coming week.

German Foreign Minister Frank-Walter Steinmeier will host his French counterpart Jean-Marc Ayrault, the Netherlands' Bert Koenders, Italy's Paolo Gentiloni, Belgium's Didier Reynders and Luxemburg's Jean Asselborn for the six-way talks on "current European political issues", the German foreign ministry said in a statement.

Steinmeier regretted Britain's decision, saying it was "a sad day for Europe and the United Kingdom".

Paris and Berlin will present their partners with "concrete solutions" to make the EU "more effective", Ayrault told AFP.

'Blow to Europe' 

German Chancellor Angela Merkel, who called the result a "blow" to Europe, said she would would host the leaders of France and Italy along with EU President Donald Tusk in Berlin on Monday to try to chart a reform plan.

"We take note of the British people's decision with regret. There is no doubt that this is a blow to Europe and to the European unification process," Merkel told reporters in Berlin.

With global markets in turmoil, she said it was important to "not draw quick and simple conclusions from the referendum in Great Britain, which would only further divide Europe."

EU chiefs have urged Britain to leave as "soon as possible, however painful that process may be".

European Commission chief Jean-Claude Juncker said he was "very sad" that Britain had voted to leave, but repeated that there would be "no renegotiation" of Britain's membership.

Leaders of the EU, born out of a determination to forge lasting peace after two world wars, will open a two-day summit on Tuesday to grapple with Britain's decision.

The shock outcome of Thursday's historic referendum could have a knock-on effect on other EU members battling hostility to Brussels and possibly lead to the break-up of the United Kingdom after Scotland raised the prospect of another independence vote.

Britons, many worried by immigration and what they saw as interference in the running of their country by bureaucrats in Brussels, voted by 52 to 48% to abandon the bloc after 43 years of often troubled membership.

In an emotional statement outside Downing Street, Cameron said he would resign to make way for a new leader by early October after the failure of his "Remain" campaign.

"I do not think it would be right for me to try to be the captain that steers our country to its next destination," he said as sterling, global stocks and oil prices plummeted.

'Take a bow' 

The result caused the pound to fall to a 31-year low of $1.3229 at one point but it recovered some ground after the Bank of England said it stood ready to pump 250 billion ($370 billion, 326 billion euros) into the financial system to avert a crisis.

European stock markets dropped around eight percent at opening before recovering later, while British bank shares lost a quarter of their value in morning trade.

London's FTSE 100 index recovered to close down 3.2 percent. US stocks dived, with both the Dow and S&P 500 closing down more than three percent.

Britain will be the first country to leave the EU, in a move seen a victory for the anti-establishment rhetoric of the Brexit campaign that highlights growing populism across Europe.

"Take a bow, Britain!", eurosceptic newspaper the Daily Mail wrote across its front page on Saturday.

"It was the day the quiet people of Britain rose up against an arrogant, out-of-touch political class and a contemptuous Brussels elite," it added.

The vote, the culmination of an often poisonous campaign, exposed deep divides across British society, including between what The Independent newspaper called "those doing well from globalisation and those 'left behind' and not seeing the benefits in jobs or wages".

It may be some time before Britain takes the concrete steps needed to extricate itself from what will become a 27-member alliance.

Cameron said it should be his successor who leads the complex negotiations under Article 50 of the Lisbon Treaty which sets out a two-year time-frame to leave.

Domino effect 

The "Leave" victory threatens to shatter the unity of the United Kingdom, with Scotland and Northern Ireland voting to remain in while England -- barring big cities like London -- and Wales supported out.

Scottish First Minister Nicola Sturgeon said a second independence vote was now "highly likely" after a 2014 referendum backed staying in the UK, and the Scottish parliament was due to meet for an emergency session early Saturday.

In Northern Ireland, the nationalist Sinn Fein party seized on the result to call for a vote on reunification with the Irish Republic.

The British vote will stoke fears of a domino-effect of exit votes in eurosceptic member states that could imperil the integrity of the bloc.

Dutch far-right MP Geert Wilders and French National Front leader Marine Le Pen immediately called for referendums on EU membership in their own countries.

Germany took a more measured approach, its foreign office tweeting that "we are off now to an Irish pub to get decently drunk. And from tomorrow on we will again work for a better Europe!

Read more on:    eu  |  scotland  |  netherlands  |  germany  |  ireland  |  belgium  |  uk  |  france  |  brexit

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