Closed Brexit on Monday – Market and political turmoil rock UK

Getty

Getty

After a weekend of political ructions in both main parties, focus in the UK switched back to the economy and the business impact of last week’s vote. UK stocks fell, the pound hit a new 30-year low, while 10-year Gilt yields broke below 1% for the first time.

There were also a number of fresh developments inside the Labour party, where the attempt to unseat leader Jeremy Corbyn continued.

Key points

  • Markets were rattled – with the FTSE 100 down 2.6 per cent, the FTSE 250 off 7.0 per cent, and the pound weakening more than 3 per cent against the dollar to fall below $1.32 and set a new post-1980s low during trading.
  • George Osborne, speaking for the first time since Thursday’s vote said government ‘must deliver’ on the result
  • Boris Johnson, who hopes to replace Mr Cameron, backed BoE governor Mark Carney, and vowed to keep UK in the single market
  • David Cameron gave his first statement to the Commons since the vote to leave the EU. He ruled out holding a second referendum and made it clear any decisions on Britain’s future relationship with the Union would be an issue for his successor. Boris Johnson was not there.
  • The bloodletting in the Labour party continued, with dozens of shadow cabinet members resigning

You can catch up on what happened on Tuesday here.


Good morning.

UK chancellor George Osborne is speaking now at the Treasury, his first public appearance since the UK voted to leave the EU on Thursday.

Speaking ahead of the market open, Osborne said: “I want to reassure the British people and the global community that Britain is ready to confront what the future holds for us from a position of strength.”

Osborne added it will “not be plain sailing in the days ahead” but added people “should not underestimate” the British resolve.

“We were prepared for the unexpected and we are equipped for whatever happens,” he said, pointing to coordination among the Treasury, the Bank of England and the Financial Conduct Authority.

Osborne has made no comment on his own political future yet. Prime Minister David Cameron announced his intention to step down on Friday.


Meanwhile, former mayor of London Boris Johnson has made his first statement since Friday, when he made a brief speech with justice secretary and fellow “Leave” campaigner Michael Gove.

In his weekly column in The Telegraph , Johnson said “Leave” campaigners “must do everything we can to reassure the Remainers”.

“We must reach out, we must heal, we must build bridges – because it is clear that some have feelings of dismay, and of loss, and confusion,” he said.

Fifty-two per cent of voters backed Britain leaving the EU, compared to 48 per cent who favoured remaining in the 28-country bloc.

Johnson went on to insist that the “negative consequences are being wildly overdone”, saying: “The stock market is way above its level of last autumn; the pound remains higher than it was in 2013 and 2014.”

And unlike Ukip leader Nigel Farage, who said over the weekend that Bank of England governor Mark Carney may have to vacate his post, Johnson said Carney has “done a superb job”, adding, “now that the referendum is over, he will be able to continue his work without being in the political firing-line”.

Read more here.


“Political turmoil and isolation” is the headline on today’s FT in London.

https://twitter.com/FT/status/747152284040192000

You can read our full coverage of the aftermath of last Thursday’s vote here.


Sterling has been falling again this morning, down by as much as 2%. After Osborne’s statement, it was off 1.7% against the US dollar, to 1.367.

But after a lot of speculation, it turns out that there was no speculation – in the pound – by billionaire George Soros. His spokesman has been talking to Reuters, read more here.


Here is what the other papers are saying this morning, via the BBC’s Neil Henderson.

The International New York Times says the referendum has provoked a “caustic postwar unraveling”:

https://twitter.com/hendopolis/status/747136990924148736

In London, Metro has a picture of Westminster under the headline, “The Lights Are On But Nobody’s Home”:

https://twitter.com/hendopolis/status/747163280548966400

In Scotland, the pro-independence The National has a photo of Scottish first minister Nicola Sturgeon, who said yesterday: “The UK that Scotland voted to stay in doesn’t exist anymore”.

https://twitter.com/hendopolis/status/747168011023421440

The Daily Express looks at the pressures faced by outgoing Prime Minister David Cameron:

https://twitter.com/hendopolis/status/747174565349056512

The Guardian and the Independent zero in on the challenges to Labour leader Jeremy Corbyn, as Labour MPs put pressure on him to resign:

https://twitter.com/hendopolis/status/747176438265167874

https://twitter.com/hendopolis/status/747177144934141952

While the Daily Mail calls people who oppose Brexit in the UK and EU “bitter losers”:

https://twitter.com/hendopolis/status/747177868061515777

The Daily Telegraph dedicates nearly half a page to its columnist and former mayor of London Boris Johnson:

https://twitter.com/hendopolis/status/747178855492837376

The Times reports that UK chancellor George Osborne is considering a deal to support Johnson’s anticipated bid for leadership of the Conservative party:

https://twitter.com/hendopolis/status/747182529808072710

While The Sun says justice secretary Michael Gove will lead the push for Johnson to succeed Cameron as prime minister:

https://twitter.com/hendopolis/status/747183894114504705


The Press Association is reporting that another two Labour MPs have resigned from their posts.

Diana Johnson has resigned as a shadow foreign minister and Anna Turley as shadow minister for civil society, according to the PA.

Turley has posted her resignation letter on Twitter.

https://twitter.com/annaturley/status/747320379874541568

Toby Perkins, shadow armed forces minister, also posted his resignation letter this morning.

https://twitter.com/tobyperkinsmp/status/747320957476315136


If you’re wondering whether the UK actually will leave the EU, it’s worth catching up with the latest from David Allen Green, an expert on constitutional law. His website is currently down, but you can still read his latest think piece on Facebook:

In essence, Cameron did not invoke Article 50: no notification was sent to the European Union. In my view, the failure to send the notification on the very day after the referendum will mean that there is a strong chance it will never be sent at all.


UK chancellor George Osborne made his first statement since the referendum earlier in an attempt to reassure markets earlier this morning.

You can read his full remarks here courtesy of the fastFT team.

And here is a take from the FT’s Katie Martin and George Parker.


Emoticon The FTSE 100 has opened down -0.7% to 6,095 points.


Another person asking if the UK will actually leave is FT columnist Philip Stephens. His latest is on the realisation that quitting the bloc will be far harder than anyone previously realised:

It is far from fanciful to imagine that the next two years or so will see the complete recasting of the nation’s politics, quite possibly with the creation of a new, centrist, pro-European party. So those who want Britain to stay close to its own continent could think the unthinkable and work to make it thinkable.


The FT’s Philip Stephens has also been asking if the UK will actually leave the EU. His latest looks at the mammoth task of quitting, and suggest there is still a slim chance the UK might stay.

It is far from fanciful to imagine that the next two years or so will see the complete recasting of the nation’s politics, quite possibly with the creation of a new, centrist, pro-European party. So those who want Britain to stay close to its own continent could think the unthinkable and work to make it thinkable.


In corporate news, easyJet has warned investors that “additional economic and consumer uncertainty” after the referendum is likely to hit revenue per seat, a key metric for the low-cost airline.

In a statement this morning, easyJet said:

It is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage compared to the second half of 2015. In addition, recent movements in fuel prices and exchange rates are now expected to add around £25 million of additional cost in the year to that guided at the Half Year Results. In response, easyJet is continuing its efforts to drive ex fuel cost savings.

EasyJet also pointed to strike action by French air traffic controllers, runway and congestion issues at London’s Gatwick airport, severe weather and terror-related to concerns to illustrate what it called “extremely challenging” trading conditions.

Shares in easyJet fell almost 15 per cent on Friday.

At the time, the company said it was “confident” the referendum result “will not have a material impact on its strategy or its ability to deliver long term sustainable earnings growth and returns to shareholders”.

At pixel time this morning, easyJet shares are down more than 8 per cent.


Another company taking a hit today: Foxtons.

The London-focused estate agent has issued a profit warning, citing uncertainty caused by the referendum.

“The run up to the EU referendum led to significant uncertainty across London residential markets and the decision to leave Europe is expected to prolong that uncertainty,” Foxtons said in a statement on Monday.

“Whilst it is too early to accurately predict how the London property sales market will respond, the upturn we were expecting during the second half of this year is now unlikely to materialise.”

Shares in Foxtons are down more than 12 per cent this morning.

Read more on fastFT here.


It looks like Stephen Kinnock, the parliamentary private secretary (PPS) to shadow business secretary Angela Eagle, is the latest Labour MP to exit Jeremy Corbyn’s shadow government, posting his own resignation letter on Twitter this morning.

https://twitter.com/SKinnock/status/747324023260864514


Meanwhile the Confederation of British Industry (CBI), Britain’s biggest employer group, has issued a statement, with its director-general Carolyn Fairbairn saying the impact of the referendum “cannot be underestimated”.

“The government must act with urgency to minimise the uncertainties that affect investment decisions and slow job creation,” Fairbairn added.

Read more here.


The Times cartoonist Morten Morland seems rather unsympathetic to the situation Vote Leave’s leaders now find themselves in:

https://twitter.com/mortenmorland/status/747329588489916417


Labour leader Jeremy Corbyn has reshuffled his shadow cabinet this morning, filling many of the seats vacated by resignations yesterday.

Notably, Emily Thornberry will take over as shadow foreign secretary from Hilary Benn, who was fired over the weekend after telling Corbyn he had “no confidence” in his leadership.

Diane Abbott becomes shadow health secretary. Heidi Alexander resigned from that post yesterday.

The full list of new appointments:

Shadow Foreign Secretary – Emily Thornberry
Shadow Health Secretary – Diane Abbott
Shadow Education Secretary – Pat Glass
Shadow Transport Secretary – Andy McDonald
Shadow Defence Secretary – Clive Lewis
Shadow Chief Secretary to the Treasury – Rebecca Long-Bailey
Shadow International Development Secretary – Kate Osamor
Shadow Environment Food and Rural Affairs Secretary – Rachel Maskell
Shadow Voter Engagement and Youth Affairs – Cat Smith
Shadow Northern Ireland Secretary – Dave Anderson


A few share price moves this morning in London:

Foxtons -19%
RBS -6.9%
Barclays -5.8%
Persimmon -1.6%
BP +0.2%
Easyjet -11%


If you’d like to read more on what investment bank analysts and economist think of the Brexit vote, there’s a handy roundup here. But the main point is: don’t expect a bounce back.


Some more Labour resignations for those of you keeping track at home:

https://twitter.com/SteveReedMP/status/747333864486404097

https://twitter.com/Y_FovargueMP/status/747333082886221825

https://twitter.com/jessphillips/status/747334934923141120

We will have a full list of who has handed in their notice soon.


FTfm has a Brexit special today. Here are some of the highlights:

Brexit job losses loom for London funds

London’s fund industry will be hit by job losses after the UK voted to leave the EU. The move sent shockwaves through the asset management sector and triggered turmoil in global financial markets.

Fund houses pick through Brexit wreckage

“Wake me up when the result changes to one in which we voted to remain in the EU,” said one chief executive of a large fund management company, who stayed up the whole of Thursday night and watched the outcome of the UK referendum on EU membership through his fingers.

UK’s pension funding hole hits £900bn after Brexit

The UK’s pension funding hole hit a record high of £900bn after Britain’s surprise vote to leave the EU, prompting concerns about the future of some retirement schemes.


Shares in UK housebuilders keep sliding this morning.

Taylor Wimpey shares fell as much as 6 per cent while Berkeley Group dipped 8 per cent, following sharp drops on Friday. Barrat Developments and Bellway also fell more than 5 per cent.

The FTSE 100, in contrast, is down around 0.8 per cent this morning.

Shares in Foxtons are down 18 per cent this morning after the London-focused estate agent issued a profit warning.

Read more on fastFT here.


Look away now Leavers – Sir Richard Branson wants Parliament to think again about leaving the EU. He’s written a blog on it here:

Based on the misrepresentation made by the Leave campaign, Parliament needs to take the petition of more than three million people to call for a new referendum seriously. The alternative is to watch a rapid decline of Britain’s health and wellbeing.


Labour leader Jeremy Corbyn has left his house:

https://twitter.com/mazoe/status/747341471842340864


Emoticon 10-year UK gilt yields have broken below 1% for the first time, dropping 8 basis points to 0.999%. More to come on this.


Gamblers have been putting a few pennies on George Osborne to be the next Tory leader after his statement this morning. William Hill says the odds have come in from 28/1 to 20/1.


The Czech foreign minister is blaming Jean-Claude Juncker for the UK’s decision to quit the EU, saying he didn’t do enough to keep Britain happy. This from The Independent:

Lubomir Zaoralek said someone in the EU should take “responsibility” for the vote of British citizens to leave the EU.

“Right now I can’t see the European Commission chairman as the right man for the job,” Mr Zaoralek told Czech television.


Boris Johnson is speaking again this morning, telling reporters outside his home in Islington, north London, that “Project Fear is over”.

A short clip via Sky News:

https://twitter.com/SkyNews/status/747348416783491072


That fall in gilts has given the UK bank stocks a fresh hammering. Latest moves:

Barclays -10%
RBS -14.2%
Lloyds -8.5%
HSBC -1.9%

Elsewhere:

Deutsche Bank -6.2%
Santander -2.3%
BNP Paribas -5.2%

More here.


For more on the move in Gilts, the FT’s Elaine Moore has this on FastFT.


Foxtons shares now down -24% after it warned that full-year profits would be “significantly lower” than last year following the UK’s vote to leave the EU.

Read our full story here.


Advice on London’s property market lands from Michael Hartnett, the popular Bank of America Merrill Lynch chief strategist, reports the FT’s Dan McCrum.

It’s for risk takers to buy when the dust begins to settle, or “when GBP troughs, central banks coordinate to reduce solvency & liquidity fears, iTraxx Europe [an index of investment grade corporate credit] peaks”.

However he is also pushing the idea that the vote represents the culmination of the themes and policies which have dominated in the eight years since the crisis. One nugget of data stands out: “London accounted for 28% of all English housing sales in 2015, and just 1-2% of total land area.”

Brexit, he says, is the “biggest electoral riposte yet to Age of Inequality” and so investors should anticipate populism policy through higher levels of gold, volatility & cash. Investors should also prepare strategies for deflation and the “desperate inflationary policy responses”.


The pound is heading lower again, reports the FT’s Roger Blitz.

The mini-rally triggered by George Osborne’s appearance and announcement he was staying at his post has proved short-lived. Sterling is off 2.6 per cent on the day, taking it to just above $1.33. Friday’s low-point, when sterling hit a 30-year low, was $1.3224


US secretary of state John Kerry is heading to London today to meet with foreign secretary Philip Hammond, as well as making a stop in Brussels to sit down with EU foreign policy chief Federica Mogherini.

The FT’s Geoff Dyer, David J Lynch and Demetri Sevastopulo offer this take from Washington on Kerry’s offer to mediate Europe’s new political crisis.


As the resignations from junior ministers in Jeremy Corbyn’s shadow cabinet continue to pour in, Theo Bertram, a former adviser to Prime Ministers Tony Blair and Gordon Brown, makes this suggestion:

https://twitter.com/theobertram/status/747348368251248640

Despite mass resignations, and a proposed vote of no confidence in the Parliamentary Labour Party, however, Corbyn has vowed to fight on as leader, challenging the rebels to put up a candidate to stand against him.

You can read our full story on his shadow cabinet machinations here.


The FT’s Paris correspondent Michael Stothard has this on the French response to Brexit:

Presidential candidate of France’s centre-right party Alain Juppé called for the “swift removal” of the UK from the EU on Monday, joining the chorus of leaders who want the UK to start the process of leaving the political bloc immediately.

“The British cannot continue with one foot in Europe and another outside,” he said in an interview with Le Monde newspaper published on Monday.

Mr Juppé, a former prime minister and one of the country’s most popular politicians, also said that holding a referendum in France on the EU – demanded by some on the far-right – would be “totally irresponsible”.

He said, however, that “concrete proposals” were needed to “rebuild Europe” and that there could be a referendum on these proposals at some point. He also called for a new border agreement because “Schengen is no longer working”.


The referendum result sent gold to a two-year high above $1,350 a troy ounce on Friday, as investors looked for safe havens amid volatile currency and equity markets.

Today, the FT’s Henry Sanderson, Neil Hume and David Sheppard have just put up this take on the bullion dealers who stand to benefit from Brexit.

From London’s Harrods department store in Knightsbridge, to online precious metals dealers, many reported record volumes and demand on Friday. Sharps Pixley, which has a store in Mayfair, said online sales had drained its stocks of larger bullion bars, leading it to call on emergency reserves in Germany.

Read more here.


The FT’s Rachel Sanderson in Milan reports on possible measures in Italy to support the banking system.

Italy’s government is mulling a series of measures to prop up its banking sector amid fears of a renewed pressure as the sector reels from the UK’s vote to quit the EU, according to bankers and officials.

Italian prime minister Matteo Renzi – who is heading to Berlin to meet Angela Merkel and Francois Hollande later today – may ask for a suspension of state aid rules to allow government-sponsored capital injections to take place without triggering bail-in rules.

Among measures being considered by the government is buying billions of euros worth of common equity in Italy’s most undercapitalised banking stocks in order to boost their capital ratios, according to senior bankers.

At pixel time, UniCredit was down around -5.4%, Mediobanca off -5.8% and Intesa Sanpaolo had dropped -6.2%


For more on how the Brexit vote might hit the housing market, the FT’s Judith Evans has this:

As politicians and businesses struggle with the fallout from the UK’s Brexit referendum, many families face a dilemma closer to home: whether to proceed with house purchases set in train before the vote.

An initial wave of buyers pulled out immediately on Friday, estate agents and mortgage brokers said; other homebuyers are still assessing the potential impact of the vote on house prices and their own job security.

You can read the full story here.


Labour leader Jeremy Corbyn has been told by deputy leader Tom Watson that he is likely to face a leadership challenge, both the Press Association and the BBC are reporting.

The FT’s digital comment editor Sebastian Payne has written on Watson’s potential influence over the attempts to overthrow Corbyn.

Read Payne’s full column here.


The FT’s central Europe correspondent Henry Foy has this letter from Antanas Guoga, a member of the European Parliament and chief investment officer of Vilnius, the Lithuanian capital, to HSBC group chief executive Stuart Gulliver.

Guoga invites Gulliver to consider relocating HSBC’s European operations to Vilnius.

Foy reports that Guoga has sent similar letters to the bosses of some of Britain’s other big banks.


Emoticon George Osborne may have sought to reassure investors this morning, but his comments have done little to stop sterling’s historic slide.

The pound hit a fresh 30-year low this morning, skidding more than 3 per cent against the dollar today to $1.3217, its lowest level since 1985.

Sterling is now down 12 per cent from its Friday peak.

Earlier today, Boris Johnson told reporters that markets and sterling were now stable.

(c) Getty


Italian banking shares have hit their lowest level in nearly four years, as the country’s government considers a number of measures to prop up beleaguered lenders in the wake of the UK’s EU membership referendum, the fastFT team reports.

Read more here.


Could Scotland really quit the UK in response to the Brexit vote? There’s been plenty of talk of this since Thursday’s result, led by SNP leader Nicola Sturgeon.

However, one of the key question faced by Scotland last time around remains, and has probably become far more complicated – would Scotland join the eurozone?

FT Alphaville’s Izabella Kaminska has been looking at this subject, here’s what she had to say.


The FT’s Henry Foy has sent in this statement from the Polish Embassy in London, which says it is “shocked and deeply concerned” by recent racist incidents.

The statement in full:

We are shocked and deeply concerned by the recent incidents of xenophobic abuse directed against the Polish community and other UK residents of migrant heritage. The Polish Embassy is in contact with relevant institutions, and local police are already investigating the two most widely reported cases in Hammersmith, London, and Huntingdon, Cambridgeshire.

At the same time, we would like to thank for all the messages of support and solidarity with the Polish community expressed by the British public.

We call on all Polish nationals who fall victim of xenophobic abuse and on all witnesses to report such incidents to local authorities.

London’s Metropolitan Police confirmed on Sunday that the Polish Social and Cultural Association, a central base for Poles living in the UK since the 1960s, had suffered racially motivated criminal damage. Greg Hands, the local Tory MP — and a senior Treasury minister — described the graffiti, saying “Go Home”, as an “indescribably awful” crime.

https://twitter.com/GregHands/status/747012128066895872


Labour MP Jess Phillips, who stepped down from her position as the Parliamentary Private Secretary in Labour’s shadow education team earlier today, has posted her resignation letter on Twitter:

https://twitter.com/jessphillips/status/747371576455213056

Phillips, who has was elected as the MP for Yardley last year, did not mince her words as she called for Labour leader Jeremy Corbyn to step aside, writing: “The Labour Party is not about you.”

She added: “I’m really worried that you cannot see that you have made this all about you and not about [constituents].”

“Be the socialist you say you are, do the right thing and let the Labour Party be the opposition it needs to be now, when people need it most.”


Stephen Crabb, the work and pensions secretary seen by some as a possible candidate for Tory party leader, has set out what he would like to see of a new leader, reports the FT’s John Murray Brown.

He said any that person had to “deliver on the expectations of the 17m people who voted for Britain to come out of Europe”, but also be capable of putting a team together for a “tough negotiation” with Brussels on the terms for the UK’s exit

Mr Crabb, 43, is seen by some as lacking sufficient ministerial experience. But he has very different back story to many Conservative MPs, having been raised by a single mother on a council estate in Wales. He was once described by David Cameron as the “Russell Crowe of politics”.

Mr Crabb said:

“This isn’t just about party unity now, it’s about national unity.”

“This is a really serious moment for our country. We need stability and we need direction.”


Sterling keeps sliding.

It just sank below $1.32, to $1.3193, completing a drop of over 3.4 per cent just today.

More on fastFT here.


Earlier today 10-year UK gilt yields fell below 1% for the first time, dropping 8 basis points to 0.999%.

Now markets are pricing in a 15 per cent chance of negative interest rates in the UK, according to Hargreaves Lansdown.


German chancellor Angela Merkel has ruled out starting informal talks with London about the UK’s exit from the EU before Britain formally asks the bloc to begin official negotiations.

“Before Great Britain sends this notice, there are no informal discussions about exit procedures. The sequencing must be observed,” said Steffen Seibert, the chancellor’s spokesman, writes Stefan Wagstyl in Berlin.

More on FastFT here.


John Kerry has landed in Brussels.

The Associated Press has just published this photo of the US secretary of state with NATO secretary general Jens Stoltenberg.

Kerry is expected to meet with EU foreign policy chief Federica Mogherini and is also set to sit down with UK foreign secretary Philip Hammond in London later today.

Kerry has a busy travel schedule. Earlier today, he met with Israeli prime minister Benjamin Netanyahu in Rome.

https://twitter.com/JohnKerry/status/747383503671730176


Who is left in the shadow cabinet today? BuzzFeed has this handy guide:

https://twitter.com/jimwaterson/status/747384584384487424


Michael McFaul, former US ambassador to Russia, has written a gloomy piece for the Washington Post about how Vladimir Putin will be rejoicing at the vote to leave.

The decision by a majority of British voters to exit the European Union was not the first event in this reversal but maybe the most dramatic. Europe is now weakening as Russia, its allies and its multilateral organizations are consolidating, even adding new members. Putin, of course, did not cause the Brexit vote, but he and his foreign policy objectives stand to gain enormously from it.


The FT’s George Parker and Alex Barker reported over the weekend that UK prime minister David Cameron first decided to call for an EU referendum at a pizza restaurant at Chicago O’Hare airport.

Now reporters at Slate have done some digging in an effort to figure out which pizzeria was the location for the fateful meeting. They have concluded that it was “likely” a Pizzeria UNO in O’Hare’s Terminal 3.

Read more here.


Angela Eagle, who was both shadow business secretary and shadow first secretary of state, has resigned, in one of the most high-profile exits from Jeremy Corbyn’s shadow cabinet to date.

Eagle just revealed her resignation on Twitter, saying she was quitting “with deep regret, and after nine months of trying to make it work”.

https://twitter.com/angelaeagle/status/747388197244657665

Eagle had been seen as a senior bridge between the warring factions in the party, the FT’s chief political correspondent Jim Pickard notes.


Shadow housing secretary John Healey has also left his post, saying he “hand-delivered” his resignation letter to Jeremy Corbyn this afternoon.

https://twitter.com/JohnHealey_MP/status/747388596190126080


Amid a flurry of resignations from the shadow cabinet, Lisa Nandy – the 36-year old MP for Wigan – has zoomed up the rankings to replace Jeremy Corbyn as Labour leader. Some are now offering odds of just 3/1. That puts her in similar territory to Tom Watson, current deputy leader – and silent disco fan.

If you’ve never heard of her, she looks like this:

Sophy Ridge, Sky News correspondent, has more on her here in The Daily Telegraph.


Nearly 4,000 people have said they are going to a “Keep Corbyn” rally later today outside the House of Commons.

Momentum, the pro-Corbyn grassroots organisation, has organised the event in Parliament Square from 6pm, to coincide with the Parliamentary Labour Party meeting scheduled for this evening.

“A small number of Labour MPs are using this as an opportunity to oust Jeremy, disrespect the Labour membership who elected him and disregard our movement for a new kind of politics,” organisers said on the event’s Facebook page.

“We cannot let this undemocratic behaviour succeed.”


If you’re a Remain supporter hoping that Article 50 – the trigger to start the two year countdown on exiting the EU – is never actually invoked, then the clever chaps at the UK Constitutional Law Association have something that might soothe you:

In this post we argue that as a matter of domestic constitutional law, the Prime Minister is unable to issue a declaration under Article 50 of the Lisbon Treaty – triggering our withdrawal from the European Union – without having been first authorised to do so by an Act of the United Kingdom Parliament. Were he to attempt to do so before such a statute was passed, the declaration would be legally ineffective as a matter of domestic law and it would also fail to comply with the requirements of Article 50 itself.

The full post is here:


What’s the rush?

Matthew Elliott, chief executive of the Vote Leave campaign, has said campaigners should be able to “go away on holiday” before triggering Article 50 to begin the UK’s divorce from the EU.

In a live interview on CNBC earlier today, Elliott said:

I don’t think we need to rush this process, during the campaign there was talk about triggering article 50 and its process of leaving the EU right away, literally Friday morning, and I think quite rightly the PM has paused on that which allows the dust to settle, allows people to go away on holiday, have some informal discussions about it, and then think about it come September, October time.


Former Bank of England governor Mervyn King has just been on the BBC, saying the run-up to the referendum was the “most dispiriting campaign” in his lifetime.

King said the “Remain” campaign had made a mistake in its tone with voters.

“They didn’t like to be told that if they were to vote to leave, they would be idiots,” King said. “And if you say to someone, you’re an idiot if you don’t agree with me, you’re not likely to bring them in your direction.”


EmoticonRBS shares are now down by 24% today. More here.


Meanwhile, European banks are also taking another beating, with European banking stocks now having lost 22 per cent of their value in the two days of trading following the referendum, coming perilously close to the all-time low hit during the depth of the sovereign debt crisis four years ago.

More here on fastFT.


In case you missed it, the Liberal Democrats have promised to get the UK back in the EU (which hasn’t left yet).

https://twitter.com/timfarron/status/747401913524682752


The UK Independence Party has made clear its opposition to holding an early general election, seeing it as an attempt “muddy the waters” on last week’s referendum result to avoid a British withdrawal from the EU, the FT’s John Murray Brown reports.

“We had [a general election] a year ago. There is a clear working majority for Britain’s withdrawal from the EU. We need to make good on that promise,” said Douglas Carswell, Ukip’s only MP.

“Clearly the oligarchy, the sort of vested interests who bankrolled the Remain campaign are now hoping they can somehow invoke a general election to muddy the waters and avoid a British withdrawal from the EU,” he told Sky News.

“Clearly that is the game plan of the vested interests. We are not, I believe, going to see a general election.”

Carswell just tweeted this picture of him with fellow Leave campaigners Gisela Stuart and Boris Johnson.

https://twitter.com/DouglasCarswell/status/747402109910458368


Hoping for a second referendum? According to Channel 4′s political editor, you’re out of luck. He says David Cameron will rule that possibility out when he speaks to parliament later today.


Investment bank economists have some bad news – growth in the UK is likely to grind to halt as a result of the referendum result. The FT’s Emily Cadman has this gloomy collection of downgrades.

While most forecasters have cut the outlook for gross domestic product growth this year to about 1.4 per cent, the big downgrades apply to 2017.

Goldman Sachs is now expecting annual growth of just 0.2 per cent in 2017, down from 2 per cent before the referendum.


What does leaving the EU mean for The City? Law firm Ashurst has this comprehensive report outlining the challenges.


Angela Eagle has just been on BBC Radio 4′s The World At One , saying in an emotional interview that she resigned as shadow business secretary earlier today because “It’s just not working”.

Sounding tearful at times, Eagle said Labour leader Jeremy Corbyn had “communication” problems.

“I think it’s the first duty of every Labour leader to communicate with the electorate,” Eagle said.

Pointing to revelations that half of Labour voters did not know the party’s position on the UK’s EU membership in the run-up to the referendum, Eagle said: “We can’t have our party led by someone who can’t get that simple message across.”

Eagle said she “finally” spoke to Corbyn today, after texting him yesterday and not receiving a response.

“There are real problems with the way that office works and the way Jeremy communicates,” she said.

Eagle refused to rule out standing in a future Labour leadership contest, should Corbyn step down.


The Press Association has the latest on the Tory party leadership contest:

A new Conservative leader should be in place by September 2, the party’s 1922 Committee executive has recommended – with nominations opening on Wednesday and closing at noon on Thursday.


Jack Lew, the US Treasury secretary, has sought to calm nerves over the fallout from Britain’s vote to leave the EU, stressing that policymakers have the tools to manage the consequences without allowing a sense of crisis to set in.

Mr Lew said on Monday that it remained incumbent on world leaders to act with “reassurance”, but noted with relief that while markets were volatile they remained orderly and free of panic, the FT’s Barney Jopson reports from Washington.

“Now the challenge is for leaders in the UK, Europe and around the world to manage through a time of change,” Lew said on CNBC.

“I believe there will be economic [consequences] but I think as we’ve seen Friday and through the early market hours today, there is a kind of orderliness in the markets. There is a surprise, and a reaction, but the systems are all working.”

Read more on fastFT here.


Will Straw, executive director of the Stronger In campaign, has come out to stick the knife into Boris Johnson, Michael Gove, and – most notably – Labour leader Jeremy Corbyn:

Jeremy Corbyn should follow David Cameron’s lead. Under his leadership, Labour is further removed from its industrial heartlands than ever before with 29 per cent of its supporters threatening to go elsewhere.

Rather than making a clear and passionate Labour case for EU membership, Corbyn took a week’s holiday in the middle of the campaign and removed pro-EU lines from his speeches.

Read the full piece here


A sampling of the Letters page in today’s FT:


Gideon Rachman, the FT’s chief foreign affairs commentator, has come out for Remain – and by that I mean he thinks the UK will end up staying in the EU after all. Read the full piece here.


Some light relief via the British comedy classic Yes Minister – Why Britain Joined the European Union. Answer: It has had same foreign policy for at least 500 years – to disunite Europe.

We had to break the whole thing up, so we had to get inside. We tried to break it up from the outside, but that wouldn’t work. Now that we’re inside we can make a complete pig’s breakfast of the whole thing: set the Germans against the French, the French against the Italians, the Italians against the Dutch. The Foreign Office is terribly pleased; it’s just like old times


A worrying tweet from FT economics editor Chris Giles

https://twitter.com/ChrisGiles_/status/747418086031097856


The heads of the Bank of England and the US Federal Reserve have pulled out of the European Central Bank’s flagship economics conference in Portugal, report Claire Jones in Sintra and Sam Fleming in Washington, DC.

Mark Carney and Janet Yellen both featured one the star-studded line-up for the annual conference, held at a luxury resort in the hills outside Lisbon.

But Mr Carney is now set to remain in the UK after attending the annual meeting of the Bank for International Settlements over the weekend. Ms Yellen is due to fly back to Washington, DC on Tuesday.

Both were set to speak on a panel with the ECB president on Wednesday before cancelling.

Mario Draghi, head of the European Central Bank, will be there however. He will deliver the opening remarks at the conference this evening and make a speech tomorrow morning.

Several policymakers from within the eurozone are expected to join him at the event, including members of the ECB’s executive board and heads of some of the single currency area’s national central banks.


Alleged xenophobic abuse against Poles in the UK is being taken seriously in Number 10. According to Henry Foy, our Central Europe Correspondent, David Cameron has called Beata Szydlo, the Polish prime minister, to talk about the security of Poles in Britain.

We’ll bring you more as and when it comes.


Over in the Commons, where David Cameron will begin speaking in half an hour, the extent of the chaos in the Labour party is becoming clear. Clive Lewis, who has only been an MP for just over a year, has been made shadow defence secretary.

Unfortunately – at least according to the Labour MP John Woodcock – Mr Lewis is currently on his way back from Glastonbury and so cannot take up his post in time for his first session of defence questions.

https://twitter.com/JWoodcockMP/status/747394488474157057

Wherever he is, Mr Lewis is not in the Commons, and Emily Thornberry, the new shadow foreign secretary, has stepped up in his place.


US stocks, which opened just over an hour ago, have joined their European equivalents in the red. So far the S&P 500 index is down by 1.4 per cent, the Dow Jones by 1.3 per cent and the Nasdaq by 1.6 per cent.

It joins the pan-European Eurostoxx 50 which has slid by 2.3 per cent today as well as the German Dax index which is down by 2.2 per cent.


More Brexit fallout is to come, warns Alan Greenspan in a downbeat interview with Bloomberg. The former US Fed chairman says it is just a matter of time before Scotland gets another independence referendum and it is “almost certain” it will pass. He adds the “vulnerable institution at the moment” was the eurozone.

“There is still no back up to the ECB yet. European Central Bank assets, which had gotten up to a high level and then all the way down, have now come back all the way to the height of what they were.”

“This raises serious questions. What happens if all of a sudden the euro ceases to be a hard currency. It can happen overnight. There would be very serious difficulties.

Mr Greenspan says the EU should kick out Greece and should have done it a long time ago.

“Greece is a very toxic liability sitting in the middle of an important economic zone,” he says.

See the video here


Great chart here by HSBC via the founding editor of Business Insider UK

https://twitter.com/Jim_Edwards/status/747436106627563520


David Cameron is now speaking in the Commons. His statement starts in the same way as his resignation statement did.

But he obviously feels light-hearted enough to go for a gag. Welcoming the new Labour MP for Tooting to her place he added:

And I’d advise her to keep her phone on. She might be in the shadow cabinet by the end of the day.


Cameron refers to some of the racist attacks that have allegedly occurred in the past few days:

We will not stand for these hate crimes and they must be stamped out.


Cameron insists the Bank of England and Treasury have enough firepower to withstand a worse crises even than we face now.


Cameron on Brexit plans:

This will be the most complex and most important task that the British civil service has undertaken in decades.


David Cameron on Article 50:

Before we trigger Article 50 we need to determine the kind of relationship we want with the EU. That is something for the next prime minister and his or her cabinet to decide.


David Cameron wraps up his statement just 10 minutes after starting with a plea for Britain to stay “respected abroad, tolerant at home, engaged in the world”. Jeremy Corbyn is up now.


Jeremy Corbyn has started and is commenting on why he believes Tory governments and inequality have led to Brexit:

Many people feel disenfranchised and powerless especially in parts of the country that have been left behind for far too long… not by the European Union but by Tory governments.


FT contributor and legal expert David Allen Green highlights Cameron’s choice of language when talking about article 50:

https://twitter.com/DavidAllenGreen/status/747439422354915329


Jeremy Corbyn makes a point to his own rebellious benches:

As political leaders we have a duty to calm our language and calm our tone, especially after the events of ten days ago [with the murder of Labour MP Jo Cox]… The country will not forgive us for indulging in internal factional manoeuvering at this time.


The S&P 500 has tumbled below the 2,000 mark for the first time since March as US markets reel for another day from the UK’s decision to part ways with the EU.

more here on FastFT


Corbyn asks Cameron to rule out spending cuts or tax rises, as threatened by George Osborne in the event of Brexit.


David Cameron does not back a second referendum:

It is not right to fight the campaign all over again.


The financial markets seem unimpressed by the ongoing spectacle in the House of Commons:

https://twitter.com/TheStalwart/status/747441640260907008


Cameron and Corbyn have both spoken. Neither of them gave us much new information.

Cameron made it clear that he did not back a second referendum, and that invoking Article 50 would be up to his successor.

Corbyn attacked austerity and inequality, which he blamed for the outcome of the vote, and called on his own MPs to show him some loyalty.

Ken Clarke, the veteran europhile Tory MP, is now speaking. He asks Cameron to consider signing the UK up to the European Economic Area.


Cameron responds to Ken Clarke:

The decision to join the EEA must be for a future government.


Angus Robertson, the leader of the SNP in Westminster:

We have no intention whatsoever of being taken out of the EU against our will… If that means we have to have a second independence referendum, then so be it.


David Cameron on the prospect of a second independence referendum:

Our focus should be on getting the very best deal for the United Kingdom outside the European Union, and that includes the very best deal for Scotland as well.

Scotland benefits from being a part of two single markets – the European Union and the United Kingdom. In my view the best outcome would be for Scotland to stay in both.


Interesting from David Cameron, who backs Britain’s continued membership of the European single market, even if outside the EU. This could well mean accepting freedom of movement as well.


The FT’s deputy commodities editor reports that the pound has just fallen to a new post-1985 low:

https://twitter.com/OilSheppard/status/747443955613175808


It has been noted in the chamber that the “member for Uxbridge and South Ruislip” – one Boris Johnson – does not appear to have turned up in the chamber for this statement.


Nick Clegg, once Lib Dem leader and David Cameron’s deputy in the coalition government, stands up to speak. He praises the prime minister at length, but then asks him to back holding a new general election.

David Cameron does not seem impressed by such an idea, pointing out that the pair legislated to give parliaments fixed five-year terms:

We agreed a fixed term parliament act. I happen to think it is a good measure… It will be for [a new prime minister] to decide whether to fulfil the terms of that or do something else.


Hilary Benn stands up. The former shadow foreign secretary triggered the Labour leadership crisis with his resignation over the weekend.

Here he does not make a political point about Labour, but talks instead about how important it is that Britain continues to take an internationalist stance on issues such as climate change or Syria.


The questions in the chamber continue, with David Cameron now trading quips with some of his backbenchers. To a request by Gerald Howarth, the Tory MP, to stay on as prime minister, he jokes that he will not miss three-hour statements in the Commons.

Some of this is reminiscent of the “I’m enjoying this!” final statement in the Commons by Margaret Thatcher. That incident was covered by the FT in our obituary of the iron lady here.


David Cameron has pointed out that no country has ever enjoyed access to the single market without paying and accepting free movement of people.

It is clear he thinks Boris Johnson, who this morning advocated remaining in the single market, has an impossible choice. And Cameron is refusing to make it for him.


European bourses have now closed with all major stock markets down for the day. If David Cameron’s intention was to calm the markets with his speech he seems to have failed.

UK FTSE 100: -2.55 per cent
UK FTSE 250: -6.96 per cent

Italy FTSE MIB: -3.94 per cent
France CAC 40: -3.22 per cent
Germany DAX 30: -3.02 per cent
Ireland ISEQ: -9.47 per cent
Sweden OMX: -8.42 per cent

Other markets, which are still trading, are also feeling the aftershocks of the referendum.

US S&P 500: -2.09 per cent
Sterling against dollar: -3.44 per cent
Euro against dollar: -0.94 per cent
Swiss franc against dollar: +0.65 per cent


Caroline Lucas, the Green Party’s one MP, has denied rumours she is to be named as energy secretary in Jeremy Corbyn’s new shadow cabinet. But she does seem to be keen to discuss some kind of electoral pact with Labour.

Her office has released this statement:

There is no truth in rumours that Caroline has been offered a position in the Shadow Cabinet. She remains committed to working with other parties to achieve shared goals.

In particular she is keen to talk with other parties about the prospect of an electoral pact to beat the Tories in an early General Election, but any suggestion that she is set to join the Shadow Cabinet is incorrect.


Overall market changes do not capture some of the extraordinary moves in individual stocks over the past two days.

For example, Barclays, the bank, has lost 32 per cent of its market value. Housebuilders have also suffered with Taylor Wimpey, Barratt and Persimmon all seeing share price declines of 40 per cent over the last two days.

The FTSE 250 contains even grimmer stories. Some of the so-called challenger banks have seen their shares almost halve including OneSavings Bank, Aldermore and Virgin Money, down by 47 per cent, 45 per cent and 44 per cent respectively.


Questions have now ended in the Commons, two hours after they began, and with not many more answers. What we know now is that:

1) David Cameron will not call a second referendum;
2) The PM intends to leave the detail of any future policy and negotiation up to his successor. We had no further details today at all;
3) Jeremy Corbyn will try and cling onto his position as Labour leader despite mass shadow cabinet resignations.
4) Boris Johnson is not keen to be seen in public – he did not turn up to the session.


Politicians from around the world are responding to Britain’s departure from the EU in different locations in the world. François Hollande, Angela Merkel and Matteo Renzi (below) are all in Berlin giving a press conference.

Meanwhile John Kerry, the US secretary of state, has been speaking at the foreign office in London alongside his British counterpart Phillip Hammond.

Here is a summary of the key points so far:

1) Merkel, Hollande and Renzi have said there should be no talks on the relationship between the UK and the EU – formal or informal – before the UK triggers Article 50. That would increase the time pressure on Britain to reach an agreement, as there would then be a two-year time limit on Article 50 talks.

2) They have also said Britain should trigger those talks as soon as possible.

3) Kerry, reports Henry Mance, has said he special relationship “remains as strong and as crucial as ever.” “Good friends,” he added, “… are especially
important at complex times.”

4) Philip Hammond, the foreign secretary, said that he expects Britain to continue to support European operations against people-smuggling in the Mediterranean, “regardless” of its future status in relation to the US.


The markets fallout from Brexit is hurting a lot of people – even those that backed Brexit themselves.

Peter Hargreaves, the biggest individual donor to the Brexit campaign (he gave £3.2m to Leave.EU), has lost more than £400m in the last few days on the shares he holds in his investment company Hargreaves Lansdown.

But he has told the Guardian he has no regrets:

The shares have suffered a fallout just as everything else has. Hargreaves Lansdown has fallen quite a lot.

I didn’t do this for personal gain. I thought it would first and foremost be good for Britain.


Here is some of what our readers have been saying during another dramatic day of Brexit-related news.

From rrrahul, commenting on Gideon Rachman’s piece about why he believes Brexit won’t happen:

As someone who was undecided on the referendum even until the last minute, my head and heart were completely aligned by Friday morning: Brexit was a huge mistake. How could I have been so conflicted earlier?

Clearly, Britain belongs in the EU. Yet part of me thinks that without the referendum, the Brussels bureaucrats, Merkel, and all would never have taken EU citizens’ demands seriously.

From Orthus, on Paul Marshall’s piece about Britain flourishing free from the “shackles” of Brussels:

What ‘shackles of Brussels’ exactly? I run a business of which a substantial portion is exports. I have yet to come across a single regulation or directive from Brussels that has had any negative impact on my business whatsoever.

Quite the contrary – common standards makes us more competitive while it stops far cheaper suppliers from undercutting us, because they simply cannot achieve the same standards at those prices.

And from Russ Brown on Nicholas Barrett’s piece about Millennials’ reactions to the vote:

I am a millennial who has emigrated (in 2013).

I flew back to the UK on Friday to gauge opinion, and frankly, the stability I enjoy here in Germany in comparison to the appalling democracy being perpetrated in the UK made me race back to Heathrow to flee the heartlands of a country I can barely recognise.


As the wider US equity market slides downwards investors are seeking the relative safety of utilities and telecoms stocks, according to our colleagues on Fast FT. Telecoms are up by 3.5 per cent this month while utilities are up by 5.9 per cent.

You can read more here 5


The ratings agency Standard and Poor’s has lowered its rating of British government debt from AAA to AA following the referendum. That was the final AAA rating attached to UK government debt.

Standard and Poor’s forecast a “less predictable, stable, and effective policy framework in the UK” as one of the reasons as well as “a marked deterioration of external financing conditions in light of the U.K.’s extremely elevated level of gross external financing requirements.”

In other words, they are worried about the slide in the value of the pound given how much the UK relies on borrowing from abroad.

They also point towards wider constitutional issues created by the referendum in Scotland and Northern Ireland.

The agency said:

The negative outlook reflects the risk to economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the U.K. if there is another referendum on Scottish independence.