In World Economy News 27/06/2016
The European Union’s founding members increased pressure on the U.K. to leave the bloc as soon as possible following this week’s stunning referendum as Scotland accelerated plans to take another run at independence.
Six EU foreign ministers said in Berlin that the bloc needs to move on and avoid a political vacuum. While EU Commission President Jean-Claude Juncker said he doesn’t expect “an amicable divorce,” German Chancellor Angela Merkel repeated her desire today to avoid “ugly negotiations.”
“We now have to open the possibility for dealing with Europe’s future,” German Foreign Minister Frank-Walter Steinmeier said after hosting talks with his colleagues from France, Italy, the Netherlands, Belgium and Luxembourg in Berlin on Saturday. “That is why we jointly say: This process should start as soon as possible.”
The aftershocks of last week’s referendum are already beginning to ricochet through Europe and are reshaping the U.K.’s political landscape a day after Prime Minister David Cameron announced his intention to resign. Expressing shock about the British vote to leave the U.K., Steinmeier told reporters it’s more urgent than ever for the EU to agree on ways to boost jobs and growth.
Fast Response
Germany called the meeting to signal that show the EU can respond quickly to the loss of the U.K., yet no immediate proposals emerged from the talks and differences of approach to the exit talks were apparent.
“Great Britain needs to say which kind of relationship it imagines having with the EU,” Merkel told reporters in Potsdam, outside Berlin. Those talks should be “matter-of-fact” and “shouldn’t drag on forever,” she said.
Others were less polite.
“We demand that the 27 other member countries also get respect” from the U.K., French Foreign Minister Jean-Marc Ayrault said in Berlin. “That’s one of the reasons we came to Berlin today.”
In a sign of how the U.K.’s membership of the EU is already heading into limbo status, Jonathan Hill, Britain’s representative on the European Commission, said today he will resign. “I don’t believe it is right that I should carry on as the British commissioner as though nothing had happened,” he said in an e-mailed statement. Cameron will now have to name a replacement.
Moody’s Outlook
In the U.K., politicians and investors are still coming to terms with the result. Moody’s Investors Service lowered its outlook on Britain to negative from stable last night, referring to “heightened uncertainty” as the country begins the long process of withdrawing from the EU.
Scottish First Minister Nicola Sturgeon reiterated that she’s pressing ahead with plans to prepare a second independence referendum. She also said that she will be seeking talks with European leaders and EU institutions about ways of continuing Scotland’s relationship with the bloc.
The question of EU membership is a particularly potent one in Scotland after it became a major issue in the 2014 independence campaign, with Cameron arguing that only a vote to stay in the U.K. could guarantee ongoing membership in the bloc.
Building Unity
“We are determined to act decisively, but in a way that builds unity across Scotland about the way forward,” Sturgeon said after a meeting of her cabinet. “We will seek to enter into immediate discussions with EU institutions and EU member states to explore all possible options to protect Scotland’s place in the EU.”
In London, Labour leader Jeremy Corbyn struck a defiant tone after senior lawmakers blamed him for failing to galvanize enough party support to back the “Remain” campaign. A motion of no confidence in his leadership was submitted on Friday by two lawmakers.
“Yes, I’m here,” Corbyn said when asked after a speech if he’d contest another leadership election.
Source: Bloomberg
