The U.K. economy is strong enough to face the future but needs to adjust to the new situation, Chancellor of the Exchequer George Osborne said Monday in a bid to calm financial markets that have been roiled by the country's decision to leave the European Union in the June 23rd referendum.
"Britain is ready to confront what the future holds for us from a position of strength," Osborne said in his first public remarks since Britons voted to leave the EU.
Osborne had campaigned for the U.K. to remain in the EU, just like Prime Minister David Cameron, who announced his resignation on Friday after the referendum results.
"I said we had to fix the roof so that we were prepared for whatever the future held. Thank goodness we did," Osborne said. "Our economy is about as strong as it could be to confront the challenge our country now faces."
That said, the "Brexit" will have an impact on the economy and public finances – and there will need to be action to address that, he said.
Osborne's remarks came just ahead of the U.K. market opening on Monday. The benchmark FTSE 100 Index tumbled 0.8 percent on opening and the pound dropped further against the dollar after reaching a 31-year low on Friday.
The chancellor also said that it was sensible to wait for the Office for Budget Responsibility's economic assessment and a new Prime Minister to decide when to trigger Article 50 of the Treaty of the EU that governs the exit process.
"Only the UK can trigger Article 50, and in my judgement we should only do that when there is a clear view about what new arrangement we are seeking with our European neighbours," Osborne said.
There will be a two-year timetable for the exit negotiations once the Article 50 is invoked. The EU has urged Britain not to delay the process too much, while the "Leave" campaign says there is no need to hurry.
Acknowledging the volatility in the financial markets, Osborne said the Treasury, the Bank of England, and the Financial Conduct Authority have put in place robust contingency plans for the immediate financial aftermath of the "Brexit".
The chancellor had also discussed a coordinated response with other major economies and finance ministers and central bank governors of the G7. He also had talks with his European counterparts, the IMF managing director, the U.S. Treasury Secretary and the Speaker of Congress, and the CEOs of some of the major financial institutions.
Referring to his interactions with Bank of England Governor Mark Carney, Osborne said, "We have further well-thought-through contingency plans if they are needed."
"It will not be plain sailing in the days ahead," the chancellor said. "But let me be clear. You should not underestimate our resolve."
Regarding the delay in triggering Article 50, Osborne said there will be no change to people's rights to travel and work, to the way goods and services are traded, or to the way the economy and financial system is regulated.
He also sought action to tackle the situation when firms are continuing to pause their decisions to invest or to hire people.
"To all companies large and small I would say this: the British economy is fundamentally strong, we are highly competitive and we are open for business," Osborne said.
He also said that he plans to play an active part in the negotiations dealing with the U.K.'s exit from the EU, an indication that he will not step down from his post. He also did not hint at the need for an emergency budget.
"I do not want Britain to turn its back on Europe or the rest of the world," Osborne said.
Meanwhile, British businesses are urging the government to hasten the "Brexit" process so as to reduce uncertainty and the consequent impact on the economy.
In a letter to the Times newspaper on Monday, the Confederation of British Industry Director-General Carolyn Fairbairn urged the British government to act with urgency to minimize the uncertainties from the 'Brexit' that affect investment decisions and slow job creation.
Elsewhere in Europe, German Chancellor Angela Merkel, French President Francois Hollande and Italian PM Matteo Renzi are set to hold talks in Berlin later on Monday. Merkel had sought calm and composed decisions over the matter.
The EU 27 leaders are set to discuss the "Brexit" on Wednesday.
Meanwhile, a German government spokesman indicated that there will not be any informal EU talks over the matter before the U.K. makes a request to invoke Article 50. A similar comment was made by a European Commission spokesperson.
EU Financial Stability Commissioner Lord Jonathan Hill quit his post last week, citing the "leave" vote in the referendum.
There are also calls for European Commission President Jean-Claude Juncker to step down, owing partial responsibility for the "Brexit". A European Commission spokesman dismissed the demand saying that Juncker did everything to create a positive campaign.
U.S. Secretary of State John Kerry is in Brussels, and will be in London later, on Monday to reaffirm his country's the partnership with the EU and the U.K.
Within the U.K., the political fallout from the "Brexit" keeps growing and is turning murkier each day.
Scottish First Minister Nicola Sturgeon stepped up resistance against the "Brexit". While strengthening the demand for a second independence referendum, she also suggested that the Scottish Parliament can block the resolution for the U.K.'s exit from the EU. Scotland had largely voted to remain in the EU.
Sturgeon is set to hold talks with the Irish President Michael Higgins, who is on a three-day tour of Scotland. Northern Ireland, which voted to remain in the EU, has also raised the need for exploring Irish reunification.
And the Labour Party is witnessing a revolt against its leader Jeremy Corbyn, who favored "remain". On Monday, Corbyn appointed a new shadow cabinet after as many as 19 ministers quit.
In an interview with the BBC, former Bank of England Governor Lord Mervyn King said there was no need to panic and called for calm.
by RTT Staff Writer
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