The UK has had its credit rating outlook downgraded to “negative” by the ratings agency Moody’s after the country voted to leave the EU. Moody’s said the result would herald “a prolonged period of uncertainty”.
Meanwhile, PM David Cameron is under pressure to speed up “divorce” talks with the EU after Brussels said exit negotiations should start immediately. EU head Jean-Claude Juncker said it was “not an amicable divorce”, but it was “not a tight love affair anyway”.
Moody’s said the referendum result would have “negative implications for the country’s medium-term growth outlook”, and it lowered the UK’s long term issuer and debt ratings to “negative” from “stable”. Tipped favourite It added: “In Moody’s view, the negative effect from lower economic growth will outweigh the fiscal savings from the UK no longer having to contribute to the EU budget.” It also said the UK had one of the largest budget deficits among advanced economies.
The financial assessment came after the UK voted to leave the EU, and a defeated Mr Cameron said he would step down as leader by autumn. Pro-Leave MP Boris Johnson is tipped as favourite to replace him. Mr Cameron had urged the country to vote Remain in Thursday’s referendum but was defeated by 52% to 48% despite London, Scotland and Northern Ireland backing staying in. On Friday morning, he stood outside 10 Downing Street alongside his wife Samantha to announce he would remain in place for the short term and then hand over to a new prime minister by the Conservative conference in October.
He said he would attempt to “steady the ship” over the coming weeks and months, but that it would be for the new prime minister to carry out negotiations with the EU and invoke Article 50 of the Lisbon Treaty, which would give the UK two years to negotiate its withdrawal. But in an interview with German TV, European Commission President Jean-Claude Juncker said: “Britons decided yesterday that they want to leave the European Union, so it doesn’t make any sense to wait until October to try to negotiate the terms of their departure – I would like to get started immediately.” He said the EU would pursue a “reasonable approach” in negotiating the separation.
Meanwhile, Conservative MEP and Leave campaigner Daniel Hannan told BBC Newsnight he could envisage a situation where the UK had “free movement of labour” with the EU. Asked if he thought Leave voters had been deceived into thinking their vote would bring an end to the freedom of movement, he said: “…do not imagine that if we leave the EU it means zero immigration from the EU, it means we will have some control.”
Earlier, Mr Cameron was given assurances from US President Barack Obama that the UK would remain “an indispensable partner”. In a telephone call, the US leader told Mr Cameron that he regretted the PM’s decision to step aside, saying he was “a trusted partner and friend, whose counsel and shared dedication to democratic values, the special relationship, and the Transatlantic community are highly valued”. Mr Cameron’s announcement set in motion a debate over who would replace him. So far, no-one has formally thrown their hat into the ring but Home Secretary Theresa May and former London Mayor Boris Johnson are likely contenders.
Meanwhile, former Conservative chancellor Kenneth Clarke warned his party against a lurch to the right and adopting UKIP policies on immigration. The result of the referendum, which saw more than 30 million people turn out to vote, hit the markets causing British bank shares to lose nearly a third of their value before rallying on Friday afternoon. Retailers and the AA motoring organisation warned that petrol prices were likely to rise by 2p-3p a litre because of the pound’s fall against the dollar.
Protests have been held around the UK following the EU referendum. A group of young people disappointed with the result chanted “No borders! No Boris!” outside Downing Street. In east London, anti-racism demonstrators gathered to declare their support for refugees and migrants, before moving on to the London offices of News Corp, home to the Sun newspaper, which backed Brexit. Similar rallies were held in Glasgow and Edinburgh. The poll has also caused turmoil within Labour after many supporters chose to ignore the party’s official position to remain in the EU. Labour leader Jeremy Corbyn, who was accused of a lukewarm campaign, said poorer communities were “fed up” with cuts and felt “marginalised by successive governments”.
There have been calls for him to consider his position after some of the strongest votes to leave the EU came from traditional Labour heartlands. Senior backbencher Dame Margaret Hodge has tabled a motion of no confidence, which has the support of eight other Labour MPs, urging Mr Corbyn to resign. The motion could be debated and voted on by Labour MPs next week. But major unions, which fund the party, have urged Labour MPs not to create a leadership crisis. Shadow chancellor John McDonnell said his party needed to “gear up” for a possible snap election and that he was “disappointed” at Dame Margaret’s intervention.
The referendum result could also trigger a second independence referendum in Scotland, which wants to stay in the EU. First Minister Nicola Sturgeon said it was “democratically unacceptable” to force Scotland out of the bloc against its will. Following the EU Council meeting, a meeting of 27 EU leaders has been scheduled for Wednesday to discuss Brexit – but Mr Cameron is not invited.
Britain is set to be the first country to leave the EU since its formation – but the Leave vote does not immediately mean Britain ceases to be a member of the 28-nation bloc. That process could take a minimum of two years, with Leave campaigners suggesting during the referendum campaign that it should not be completed until 2020 – the date of the next scheduled general election.