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Economic Panic Rising, Britain Hopes to Stay in E.U. Market | |
(about 4 hours later) | |
LONDON — As investors sold off British stocks and traders drove the pound to its lowest level against the dollar since 1985, Britain struggled on Monday to absorb the magnitude of its voters’ decision to leave the European Union, and to figure out a way forward. | |
Prime Minister David Cameron and the former London mayor Boris Johnson, members of the governing Conservative Party who were on opposite sides of the debate over Britain’s membership in the 28-nation bloc, both signaled on Monday that they hoped Britain could, while leaving the European Union, somehow maintain access to its signature achievement: the world’s largest common market. | |
But as the leaders of Germany, France and Italy met to discuss the fallout from the British referendum, there were no signs that the European Union would let Britain off the hook so easily. | |
The few countries that have been given access to the European free-trade zone without joining the bloc — notably, Iceland, Norway and Switzerland — all contribute to the European Union’s budget and accept its bedrock principle of free movement of workers, the very issues that angered so many of the Britons who voted to leave in Thursday’s referendum. | |
After meeting in Berlin, Chancellor Angela Merkel of Germany, President François Hollande of France and Prime Minister Matteo Renzi of Italy said there would be no discussions, formal or informal, over British withdrawal from the bloc until Britain formally invoked Article 50, the mechanism for doing so — a task Mr. Cameron has left to his successor. “I believe that Article 50 is very clear and that Great Britain needs to submit the application and we will speak about it with our colleague, David Cameron,” Ms. Merkel said, while emphasizing that it should not be “a long-drawn-out affair.” | |
On Monday morning, George Osborne, the chancellor of the Exchequer and effectively the No. 2 figure in the government, tried to calm the markets, citing Britain’s underlying economic strengths, the greater resilience of its financial system after the 2007-8 crisis, and the readiness of the Bank of England to step in. But the markets did not seem assuaged. British and American stocks fell, as did the pound, and S&P downgraded Britain’s credit rating. | |
Mr. Cameron, who plans to resign by October, summoned his cabinet and announced the creation of a policy unit of the “best and brightest” civil servants — overseen by Oliver Letwin, a Conservative lawmaker — to orchestrate the country’s withdrawal from the European Union. He also said he had met with Prime Minister Enda Kenny of Ireland to ensure that a British departure from the bloc, of which Ireland is a member, would not endanger the fragile peace in Northern Ireland. | |
In the first meeting of Parliament since the referendum, Mr. Cameron said he considered the referendum binding. “The decision must be accepted and the process of implementing the decision in the best possible way must now begin,” he told Parliament. | |
About three-quarters of lawmakers had supported remaining in the European Union. A senior Conservative lawmaker, Kenneth Clarke, suggested that Parliament could override the referendum — which is not, in the end, binding on the government — while a Labour legislator, David Lammy, called for a second referendum. | |
Mr. Cameron brushed such ideas aside, but he also made it clear that he would not be the one in charge of Britain’s messy divorce from Europe. | |
“The British government will not be triggering Article 50 at this stage,” Mr. Cameron said. “Before we do that, we need to determine the kind of relationship we want with the European Union and that is rightly something for the next prime minister and their cabinet to decide.” | |
Asked at one point about a now-ridiculed promise by anti-Europe campaigners that current British payments to the European Union would end up going to the National Health Service, Mr. Cameron said, to laughter, “Until we leave the European Union, we will continue with our contribution to the European Union, and at that moment, my successor will have to explain where the money is going.” | |
Mr. Johnson, the most prominent face of the campaign to leave the European Union, tried to assure Britons on Monday that their country “is part of Europe, and always will be,” pledging that changes “will not come in any great rush,” and promising a Britain “rebooted, reset, renewed and able to engage with the whole world.” | |
In an opinion essay in the Monday edition of the conservative newspaper The Telegraph, Mr. Johnson offered his most detailed — and conciliatory — remarks since the referendum. | |
Mr. Johnson’s description of how he saw the future seemed like the situation enjoyed by Norway, which pays into the European Union’s budget while having no say over its rules. “E.U. citizens living in this country will have their rights fully protected, and the same goes for British citizens living in the E.U.” Mr. Johnson wrote. “British people will still be able to go and work in the E.U.; to live; to travel; to study; to buy homes and to settle down,” he added, suggesting that “there will continue to be free trade, and access to the single market.” | |
Mr. Johnson offered no details about when Britain should invoke Article 50. Nor did he lay out a plan for how Britain could maintain free trade with the European Union, without accepting the bloc’s demand for the unrestricted movement of workers. | |
“It is said that those who voted Leave were mainly driven by anxieties about immigration,” he said. “I do not believe that is so.” | |
A committee of rank-and-file Conservative lawmakers met on Monday and proposed a timetable to select two candidates for party leader. The party’s 125,000 members would choose between the two, with the goal of selecting a new leader — and therefore a new prime minister — by Sept. 2. A decision on the timetable is expected by Wednesday. | |
The proposed timetable — before the party’s scheduled conference in early October, by which Mr. Cameron has said he will step down — would increase the possibility of a general election this year. (By tradition, elections are held in the spring or summer, to maximize turnout.) | |
Unless the government fell on a no-confidence vote — an unlikely chain of events — two-thirds of Parliament would have to agree to call a new election. | |
With turmoil consuming both parties, that no longer seemed out of the question. | |
Mr. Johnson — a boisterous and often unpredictable Manhattan native and former journalist — is seen as the front-runner to replace Mr. Cameron, but he has made many enemies. The home secretary, Theresa May, who is in charge of domestic security and who advocated remaining in the European Union, has emerged as perhaps the most credible alternative. | |
Meanwhile, the opposition Labour Party found itself in a state of civil war, with veteran lawmakers calling for the resignation of its leader, Jeremy Corbyn, and warning that the party risked losing its position as one of Britain’s two main political parties, a status it has held since 1922. | |
Large numbers of voters in traditional Labour strongholds in Northeast England and Wales — many of which are economically depressed areas that receive large amounts of European Union aid — voted to leave the bloc. | Large numbers of voters in traditional Labour strongholds in Northeast England and Wales — many of which are economically depressed areas that receive large amounts of European Union aid — voted to leave the bloc. |
Mr. Corbyn’s tepid approach to campaigning for the Remain campaign was cited as a reason many traditional Labour supporters threw their lot with the nationalist, anti-European U.K. Independence Party. | |
“Too many of our supporters were taken in by right-wing arguments and I believe this happened, in part, because under your leadership the case to remain in the E.U. was made with halfhearted ambivalence rather than full-throated clarity,” Angela Eagle, the party’s spokeswoman on business issues, wrote in a letter announcing her resignation from Mr. Corbyn’s team, one of some 30 lawmakers who have abandoned him. | |
The party’s deputy leader, Tom Watson, who remains a Corbyn loyalist, warned Mr. Corbyn on Monday that he had “no authority” over Labour lawmakers, and that he faced a “bruising” battle if he wanted to stay. | |
With both parties in turmoil, Britain itself seemed at risk of coming apart: Scotland, Northern Ireland and London all voted to stay in the European Union, while most of England and Wales voted to leave. | |
“We have no intention whatsoever of seeing Scotland taken out of Europe,” said Angus Robertson, the leader of the pro-independent Scottish National Party bloc in the British Parliament. “That would be totally, totally democratically unacceptable.” He added: “We are a European country and we will stay a European country.” | |
Alex Salmond, a member of Parliament and a former leader of the Scottish National Party, blamed the government for the political vacuum, saying that neither Mr. Cameron nor Mr. Johnson had taken ownership of the mess. “If you break it, you own it,” he said. | |
John Kerry, the United States secretary of state, flew to London from Brussels on Monday to meet with Foreign Secretary Philip Hammond to discuss the fallout from the referendum. | |
In Brussels, Mr. Kerry told European leaders that he valued a “strong E.U.” The range of issues on which the United States and Europe needed to cooperate included climate protection, counterterrorism and immigration, said Mr. Kerry, who spoke alongside Federica Mogherini, the European Union’s foreign policy chief. | |
“So I think it is absolutely essential that we stay focused on how, in this transitional period, nobody loses their head, nobody goes off half-cocked, people don’t start ginning up scatterbrained or revengeful premises, but we look for ways to maintain the strength that will serve the interests and the values that brought us together in the first place,” Mr. Kerry said. | “So I think it is absolutely essential that we stay focused on how, in this transitional period, nobody loses their head, nobody goes off half-cocked, people don’t start ginning up scatterbrained or revengeful premises, but we look for ways to maintain the strength that will serve the interests and the values that brought us together in the first place,” Mr. Kerry said. |
In London, Mr. Hammond assured Mr. Kerry that Britain was not turning inward, while Mr. Kerry said that the “special relationship” between the two countries would endure. |