Top 3 Developments
- Cameron & Osborne Statements – Both the Prime Minister, in his statement to the House of Commons, and the Chancellor, speaking before the financial markets opened, sought to provide reassurance that the UK economy is strong and able to withstand the challenges ahead. Cameron and Osborne also reiterated that robust contingency plans are in place to support the economy.
- Market Turbulence – Despite the Chancellor’s statement, volatility across global financial markets continued. Banking, airline and property shares fell particularly sharply and Sterling fell more than 3% to hit a 31 year low against the Dollar. However, former Governor of the Bank of England, Lord King, stated that “I don’t think people should be particularly worried, markets move up, markets move down”.
- Corbyn in Crisis – Following the sacking of Hillary Benn in the early hours of Sunday morning, the wave of Shadow Cabinet and other Shadow Ministerial resignations continued with 23 out of 31 members of the Shadow Cabinet resigning. Deputy Labour Leader Tom Watson informed Corbyn that he has “no authority” and warned him that he is likely to face a leadership challenge.
Cameron’s Parliamentary Statement
The Prime Minister made a statement to the House this afternoon. Cameron reiterated his decision to stand down as Prime Minister by October and that the next steps in terms of leaving the EU will be left to his successor, this includes activating Article 50. He informed the House that the Cabinet, who met this morning, took the decision to form a new EU Unit, comprised of officials from various Government departments that will report directly to the Cabinet to ensure that they are fully informed regarding certain decisions that will need to be made regarding the UK’s exit. He also stressed, as he did during the EU referendum campaign, the importance of the single market and that it is vital that this remain something that the UK is able to access. Additionally, Cameron confirmed that the UK’s devolved administrations, Gibraltar, overseas territories and crown dependencies will be consulted in the withdrawal negotiations process.
Conservative Leadership contenders begin to position themselves
The events of Friday meant that many leading figures in the Conservative Party kept quiet over the weekend, possibly trying to regroup and focus on the road ahead. Boris Johnson was the only one to break cover with his column in The Telegraph on Sunday. The overarching message from this article was that of unity – bringing people together after what has been a gruelling campaign for both the Leave and Remain camp. Boris stressed that ‘Britain is part of Europe, and always will be’. This calming measure was also deployed by George Osborne early on Monday morning, his concern being the markets. He made a statement making it clear that part of his job, as Chancellor of the Exchequer, is to offer ‘stability and reassurance’ at times like these. He didn’t shy away from any of the comments he made during the EU referendum campaign, being a strong Remain supporter, but he made it clear that the economy will recover.
Alongside the effects of the referendum results, eyes are also squarely on who will put themselves forward to be the next leader of the Conservative Party. Those thought to be in the running are:
Boris Johnson, Theresa May, Stephen Crabb, Andrea Leadsom, Liam Fox, Nicky Morgan, Jeremy Hunt, George Osborne, Sajid Javid, David Davis, Graham Brady, Adam Afriyie and Alan Duncan.
Nominations will open on the 29th June and close on the 30th. A new leader is due to be in place by 2 September.
Corbyn in Crisis
Following last night’s slew of resignations, the Labour Shadow Cabinet continues to lose key members, leaving Jeremy Corbyn’s position more and more precarious. Thus far today, Shadow Business Secretary Maria Eagle as well as Shadow Work and Pensions Secretary Owen Smith, and a raft of others have resigned, bringing the total to 23 Shadow Cabinet resignations thus far. Perhaps the spikiest of the resignations to be handed in today has come from Jess Phillips, PPS to the shadow education team, who in her resignation letter has accused Corbyn of only being interested in himself, and not the welfare of the Labour Party.
Following these resignations, Corbyn has announced a new team, including Emily Thornberry as Shadow Foreign Secretary and Diane Abbott moving to health, and has said whilst he regretted the resignations, he would pledge to stand in any new leadership contest, now looking more and more likely. At tonight’s meeting of the PLP it is likely that a new leadership contest will be debated with Corbynistas pushing to make sure the leader is included in any leadership ballot.
Market Update: Manic Monday
The Chancellor George Osborne told the media at 7am this morning that the UK economy could ride out the current storm. However, financial markets across Europe remain volatile and have been further buffeted by the intensified political infighting at Westminster, and the news that Sterling hit a new 31 year low. The pound fell 3.2% to $1.32260. The FTSE 100 finished down 156.49 points at 5982.20. This represents a loss of over £80bn since the start of trading on Friday. Bank shares continue to be hit particularly badly, with RBS and Barclays having at one stage experienced 25% and 15% drops respectively.
Market snapshot:
- FTSE down 2.55% (5982.20)
- FTSE 250 down 6.96%
- France (CAC-40) down 2.97%
- Germany (DAX) down 3.02%
- Italy (FTSE-MIB) down 3.94%
- Spain (IBEX 35) down 1.83%
- US (Dow Jones) down 1.43%
- US (Nasdaq) down 2.28%
- Japan (Nikkei) up 2.39%
- Hong Kong (Hang Seng) down 0.16%
European Update
Europe continues to reel from the Brexit vote and are trying to plot a path forward. The major developments of the day are summarised below.
- An EU Council summit is scheduled for tomorrow where the Prime Minister will outline the UK’s position. The EU is keen for Britain to begin withdrawal procedures quickly with Mrs Merkel stating there should not be a “permanent impasse” and adding that informal talks cannot happen until Britain formally invokes Article 50. Some diplomats are looking at cancelling Britain’s voting rights to force their hand under Article 7 of the Lisbon Treaty.
- The French Finance Minister Michel Sapin was more combative saying Britain needed “to go quickly” to end uncertainty. The French Government is conscious that a prolonged debate will only see calls for a French referendum intensify, with Nicolas Sarkozy entering the debate saying there needed to be a new EU treaty.
- An extraordinary plenary session of the European Parliament is scheduled for 10:00 tomorrow. The motion debate calls for: a ‘swift’ withdrawal from the EU to minimise uncertainty; the UK being prevented from holding the rotating EU Presidency in 2017; and further reform of the EU to better service citizens.
- There have been suggestions that the European Commission will be side-lined in Brexit negotiations. Council President Donald Tusk is set to lead and there has been discussion over the role of Jean Claude Juncker, who was not invited to the summit in Berlin. Czech Foreign Minister Lubomir Zaoralek said Juncker should resign and a motion could be tabled tomorrow calling for his resignation.
- US Secretary of State John Kerry said European leaders should “not to lose their heads” and not to punish the UK in the upcoming negotiations during a joint press conference with EU foreign policy chief Federica Mogherini.
Key areas of current discussion:
- When will Article 50 be triggered and the withdrawal process begin?
Several key EU figures have urged the UK to begin the withdrawal process as soon as possible and today the European Parliament published a draft resolution urging the Prime Minister to trigger Article 50 and notify the outcome of the Referendum to the European Council meeting on Tuesday and Wednesday. However, both the Chancellor and the Prime Minister have stated today that the triggering of Article 50 will be left to Cameron’s successor.
- Will Scotland block Brexit?
Over the weekend, the First Minister of Scotland Nicola Sturgeon had suggested that the Scottish Parliament could attempt to block the UK from leaving the EU. However, in an interview with BBC Radio Scotland, Alex Salmond confirmed that this would not be possible and claimed that “the word veto had never passed her lips”. Indeed, legal and constitutional experts have since confirmed that whilst Holyrood could withhold consent for legislative moves to implement withdrawal from the European Union, Westminster would still be able to exercise its overriding sovereignty.
- Could the UK Parliament disobey the Referendum result?
The Referendum result is not legally binding so Parliament could in theory choose not to implement the will of the people. Indeed, the Labour MP David Lammy has called for a vote in Parliament on this and has recommended that his Parliamentary colleagues vote against withdrawal from the EU. The Liberal Democrats have also pledged to include the UK remaining inside the EU in their next General Election manifesto. However, with leading figures from across the political spectrum from both the Remain and Leave sides stating that the democratic will of the people must be respected, it is highly unlikely that the result will not be respected.
Immediate Timeline
Today
- German Chancellor Angela Merkel to hold crisis talks, firstly with the European Council President Donald Tusk and then French President Francois Hollande and Italian Prime Minister Matteo Renzi. A statement expected at 6pm (CET)
- Parliamentary Labour Party meeting will take place this evening to discuss the vote of no confidence in Jeremy Corbyn
Tuesday
- 10am-12pm (CET) = Extraordinary European Parliament session to discuss Brexit
- 1st Day of European Council Summit in Brussels: Prime Minister David Cameron to brief the other EU leaders over dinner, from 19:45 (CET), explaining the political fallout in the UK
- Meeting of the Board of the Conservative party – expected to endorse the 1922 Committee recommendations surrounding the nomination procedure for the new Conservative leader
Wednesday
- 2nd Day of EU summit: Breakfast talks between 27 leaders without David Cameron. Talks will focus on the UK’s “divorce process” as stipulated by EU’s Article 50and Donald Tusk will “launch a wider reflection on the future of the EU”. A press conferences is due in the afternoon.
- Full Meeting of the 1922 Committee – to approve the rules for the leadership nomination procedure. If approved, nominations to open immediately
Thursday
- Nominations for Conservative Party leader close at noon (subject to nomination rules being approved).
