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Banking 24 Jun 2016

The five most important reactions to Brexit you should know

The outcome of the referendum that took place yesterday in the UK, where most Britons (51.9%) voted for the UK to leave the European Union, has triggered reactions across the world. Here are the 5 statements that you cannot miss about the Brexit:

1- British Prime Minister David Cameron resigns: In his first appearance from his official residence since the outcome of the referendum was announced, David Cameron – who originally promoted the poll – expressed his respect for the results obtained. Also, he stressed that it would be incoherent for him to lead a process against which he himself campaigned. In this regard, he announced that his party will hold an extraordinary congress in October to elect a new prime minister. Cameron also sent a message of reassurance both to EU nationals in the UK and Britons living in other EU countries, indicating that their status should not be affected in the short-term.

2- The Governor of the Bank of England, Mark Carney issued a statement indicating that there will be a period of uncertainty and adjustment following this result. In his statement, he also expressed his commitment to ensure financial and monetary stability and to support the UK economy as well as his readiness to adopt the measures required to adjust the markets. In fact, he said announced that he was ready to immediately provide more than £250bn of additional funds through its normal facilities The British monetary authority also stressed the strength of the British financial system, saying that the capital requirements of the largest banks are now ten times higher than before the crisis

3- The President of the European Council, Donald Tusk, the President of the European Parliament, Martin Schulz, the President of the EU Council, Mark Rutte; and the President of the European Commission, Jean-Claude Juncker, issued a joint statement. The EU has proposed an informal meeting of the leaders of the European club – ahead of next week’s summit – to launch a profound debate about the future of the European Union. In their statement, they said that they regretted but respected the decision of the British people. “We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be,” it continues. This expectation seems to contradict Cameron’s intentions to delay the process until a new Prime Minister is appointed. According to article 50 of the treaty of the European Union, only the country wishing to leave the EU can start the process.

4- According to Rating agency S&P the country’s AAA rating outside of the EU is unsustainable.  Moody’s and Fitch also expect downgrades in Britain’s sovereign rating and in most productive sectors. Both rating agencies warned that the outcome of the referendum could boost secessionist pressures in other EU regions. However, Moody’s does not expect a significant impact on the majority of issuers with residence in the European Union.

5- U.S. President Barack Obama, who personally appealed to voters to remain in the EU during his visit to the U.K. in April, issued a statement Friday as the markets reeled insisting the decision would not undermine the “special relationship” between the two countries: “The people of the United Kingdom have spoken, and we respect their decision. The special relationship between the United States and the United Kingdom is enduring, and the United Kingdom’s membership in NATO remains a vital cornerstone of U.S. foreign, security, and economic policy.” Obama also reinforced support for the EU itself, calling it an “indispensable” partner of the U.S.

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