Cameron faces EU music after shock Brexit vote

[BRUSSELS] Shell-shocked European leaders will on Tuesday put the screws on Prime Minister David Cameron to expedite Britain's EU exit after its decision to leave rocked global markets and shook the very foundations of the bloc.

Piling on the pressure, Standard & Poor's stripped Britain late Monday of its top-notch debt rating following Thursday's Brexit referendum. Even England's footballers could not lift the mood, crashing out of Euro 2016 at the hands of minnows Iceland.

Mr Cameron, who had fought to remain in the European Union and has said he will step down, told parliament on Monday that he will not yet start the two-year countdown on leaving the EU by invoking the so-called Article 50 of the Lisbon Treaty.

"Before we do that we need to determine the kind of relationship we want with the EU. And that is rightly something for the next prime minister and their cabinet to decide," Mr Cameron said. His successor is not expected to be appointed until September.

However in Berlin on Monday, Chancellor Angela Merkel, French President Francois Hollande and Italian Prime Minister Matteo Renzi made crystal clear that they want London to get down to business to avoid more uncertainty.

"There will be no informal or formal talks on the exit of Britain until an application has been filed to leave the European Union," Ms Merkel said. A more blunt Mr Hollande told London to "not waste time".

US Secretary of State John Kerry, who together with President Barack Obama and a host of other world leaders wanted Britain to stay in the EU, on Monday urged both sides not to allow anger to poison their divorce proceedings.

"It is absolutely essential that nobody loses their head, nobody goes off half-cocked, people don't start ginning up scatterbrain or revengeful premises," Mr Kerry said in Brussels before heading to London.

The referendum result has also caused an earthquake in British politics, forcing not only Mr Cameron to quit but also leaving opposition Labour leader Jeremy Corbyn fighting for his political life.

Around 20 members of Mr Corbyn's shadow cabinet have resigned and the result of a secret ballot of Labour MPs on a no-confidence motion on his leadership is expected to be announced later Tuesday.

Jockeying has meanwhile begun within the Conservatives to replace Mr Cameron, with former London mayor and key Brexit proponent Boris Johnson and interior minister Theresa May considered front-runners. The winner may call a general election.

Investors, meanwhile, remain deeply unsettled at the prospect of one of the EU's biggest economies leaving the bloc, wiping billions off stocks worldwide since the shock referendum result - markets had banked on "Bremain" - last Friday.

Late Monday, Standard & Poor's removed Britain's cherished triple-A credit rating, downgrading it by two notches with a long-term negative outlook, while Fitch cut its rating from 'AA+' to 'AA', with a negative outlook.

Standard & Poor's warned of a possible "deterioration of the UK's economic performance, including its large financial services sector".

Both ratings agencies - Moody's already cut its outlook to "negative" but stuck to its "Aa1" rating for now - listed a possible second referendum on Scottish independence as a significant risk.

Britain as a whole voted by 52 per cent to 48 per cent to leave the EU but 62 per cent of Scots voted to stay.

The pound actually rose slightly in Asian trading on Tuesday, but this came after sterling hit a new 31-year low in New York and analysts warned the currency could face fresh selling as the crisis develops.

Similarly Asian stocks rallied and Europe's main indices opened higher, rebounding from recent Brexit-driven heavy losses, with London's FTSE 100, Frankfurt's DAX 30 and the CAC 40 in Paris all rising around two percent.

But Britain's decision has also put the remaining members of the EU - who will meet without Mr Cameron on Wednesday - under pressure to come up with an adequate response to stop other countries following Britain out of the door.

Ms Merkel, Mr Hollande and Mr Renzi on Monday said in a joint statement that while they regretted Britain's decision, the bloc is "strong enough to find the right answers".

Ms Merkel vowed that the remaining members would push on with the European project, saying that "we will suggest to our (EU) colleagues that we should put in place a new impulse ... in the coming months".

She called for unity and urged a new collective push for cooperation in areas that included "defence, growth or jobs and competitiveness".

"We are a big family and we need to reassure the members of the family. But there is also a great need to remodel the European project in the coming years... Things need to move forward," said Mr Renzi.

AFP

For more coverage of the EU referendum, visit bt.sg/BrexiT