EU leaders tell Britain to exit swiftly, markets steadier
European leaders told Britain on June 28 to act quickly to resolve the political and economic confusion unleashed by its vote to leave the European Union last week, after the IMF said the uncertainty could put pressure on global economic growth.
 |
Sterling and world stock markets recovered slightly on June 28 but investor confidence remains fragile despite policymakers saying they will take all necessary measures to protect their economies.
Last week's referendum wiped a record US$3 trillion off the value of global shares and sterling fell to its lowest level in 31 years against the US dollar.
British Finance Minister George Osborne, whose attempt to calm markets on June 27 went unheard, said on June 28 the government would have to cut spending and raise taxes to stabilize the economy after credit rating agency Fitch became the agency to downgrade UK debt.
Businesses have announced hiring freezes and possible job cuts, despite voters' hopes the economy would thrive outside the EU.
Germany's financial market regulator delivered a double blow to the City of London, saying it could not host the headquarters of a planned European stock exchange after Britain leaves the EU and could not remain a center for trading in euros.
European countries are concerned about the impact of the political and regulatory uncertainty on the economies of the other 27 other EU members while the UK government works out how and when to begin withdrawal negotiations under Article 50 of the Lisbon Treaty.
European Central Bank President Mario Draghi said on June 28 that central banks around the world should aim to align monetary policies to mitigate "destabilizing spillovers" between economies.
Draghi had added that he agreed with private economists who predict euro zone growth will be reduced by up to 0.5% cumulatively over the next three years due to the "Brexit" vote.
