Brexit sends world financial markets into freefall

Brexit sends world financial markets into freefall

LONDON - British voters dealt a seismic blow to the European Union by voting to leave the bloc, triggering the resignation of Prime Minister David Cameron on Friday (June 24) and sending world financial markets into freefall.

The shock outcome of Thursday's historic referendum could have a knock-on effect on other EU members battling hostility to Brussels and possibly lead to the break-up of the United Kingdom after Scotland raised the prospect of another independence vote.

Britons, many worried by immigration and what they saw as interference in the running of their country by bureaucrats in Brussels, voted by 52 to 48 percent to abandon the bloc after 43 years of often troubled membership.

In an emotional statement outside Downing Street, Cameron said he would resign to make way for a new leader by early October after the failure of his "Remain" campaign.

"I do not think it would be right for me to try to be the captain that steers our country to its next destination," he said as sterling, global stocks and oil prices plummeted.

Britain will be the first country to leave the EU, in a move seen a victory for the anti-establishment rhetoric of the Brexit campaign that highlights growing populism across Europe.

"We've done it! We've won!" anti-EU campaigners shouted at a party in London, popping open champagne bottles as "Leave" victories flowed in. "Out! Out! Out!", they chanted as dawn broke.

European Commission chief Jean-Claude Juncker denied it was the beginning of the end for the EU, already troubled by economic and migration crises.

But German Chancellor Angela Merkel called the result a "blow" to Europe while French President Francois Hollande admitted it was a "grave test".

US President Barack Obama, who publicly threw his weight behind British EU membership during a visit to London in April, insisted the "special relationship" between the two countries was "enduring".

The vote, the culmination of an often poisonous campaign, exposed deep divides across British society, including between what The Independent newspaper called "those doing well from globalisation and those 'left behind' and not seeing the benefits in jobs or wages".

See also: Brexit just happened, what does it mean for travellers?

It may be some time before Britain takes the concrete steps needed to extricate itself from what will become a 27-member alliance.

Cameron said it should be his successor who leads the complex negotiations under Article 50 of the Lisbon Treaty which sets out a two-year time-frame to leave.

Top Brexit campaigner Boris Johnson, the former mayor of London and a favourite to succeed Cameron, also said there was "no need for haste".

But European chiefs, including EU President Donald Tusk, made clear in a statement that the country should set the wheels in motion "as soon as possible, however painful that process may be".

Leaders of the EU, born out of a determination to forge lasting peace after two world wars, will open a two-day summit on Tuesday to grapple with Britain's decision.

The "Leave" victory threatens to shatter the unity of the United Kingdom, with Scotland and Northern Ireland voting to remain in while England - barring big cities like London - and Wales supported out.

Scottish First Minister Nicola Sturgeon said a second independence vote was now "highly likely" after a 2014 referendum backed staying in the UK.

"The option of a second referendum must be on the table and it is on the table," she told reporters, saying it was "democratically unacceptable" for Scotland to be dragged out of the EU against its will.

In Northern Ireland, the nationalist Sinn Fein party seized on the result to call for a vote on reunification with the Irish Republic.

The possibility of such a vote is included in the 1998 peace accord that largely ended three decades of violence in the province, but leaders north and south of the border were quick to dismiss the idea, with Irish Prime Minister Enda Kenny saying there were "much more serious issues to deal with." Back in London, anti-EU firebrand campaigner Nigel Farage, leader of the UK Independence Party, said June 23 should "go down in our history as our independence day".

Immigration and growing financial insecurity have become rallying cries for populists across Europe, just as they have for Donald Trump's campaign in the US presidential election.

Trump hailed the vote as he arrived in Scotland to unveil a refurbishment of his Trump Turnberry golf course.

"I think it's a great thing. I think it's a fantastic thing," he told reporters. "People want to take their country back, they want independence." The result caused the pound to fall to a 31-year low of $1.3229 at one point but it recovered some ground after the Bank of England said it stood ready to pump £250 billion ($370 billion, 326 billion euros) into the financial system to avert a crisis.

See also: Crashing pound over Brexit draws queues at Singapore money changers 

European stock markets dropped around eight percent at opening before recovering later, while British bank shares lost a quarter of their value in morning trade.

"It's a madhouse in here. It has been a bloodbath. Carnage," said David Papier, head of sales trading at foreign exchange house ETX Capital in London.

London's FTSE 100 index recovered to close down 3.2 percent. US stocks dived on opening, with both the Dow and S&P 500 down about three percent by the middle of the East Coast day.

British voters appeared to have shrugged off warnings that a Brexit could leave a gaping hole in the budget, requiring spending cuts and tax increases once Britain loses unfettered trade access to the EU.

Their decision will stoke fears of a domino-effect of exit votes in eurosceptic member states that could imperil the integrity of the bloc.

Dutch far-right MP Geert Wilders and French National Front leader Marine Le Pen immediately called for referendums on EU membership in their own countries.

See also: Everyone has an opinion on Brexit but the social media folks do it best

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