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British people voted to leave the EU

2016-06-25


Prime Minister David Cameron made a statement in Downing Street on the outcome of the referendum on the UK's membership of the European Union. The country has just taken part in a giant democratic exercise – perhaps the biggest in our history. Over 33 million people – from England, Scotland, Wales, Northern Ireland and Gibraltar – have all had their say.

The British people have voted to leave the European Union and their will must be respected. I want to thank everyone who took part in the campaign on my side of the argument; including all those who put aside party differences to speak in what they believed was the national interest.

I would reassure those markets and investors that Britain’s economy is fundamentally strong. We must now prepare for a negotiation with the European Union. I have also always believed that we have to confront big decisions – not duck them. The British people have made a very clear decision to take a different path, and as such I think the country requires fresh leadership to take it in this direction.

And I would also reassure Brits living in European countries, and European citizens living here, that there will be no immediate changes in your circumstances. There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold. Delivering stability will be important and I will continue in post as Prime Minister with my Cabinet for the next 3 months.

Statement from the Governor of the Bank of England:

The people of the United Kingdom have voted to leave the European Union. Inevitably, there will be a period of uncertainty and adjustment following this result.

There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold. Some market and economic volatility can be expected as this process unfolds. But we are well prepared for this.  The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning.

The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward. These adjustments will be supported by a resilient UK financial system – one that the Bank of England has consistently strengthened over the last seven years.

The capital requirements of our largest banks are now ten times higher than before the crisis. UK banks have risen over £130bn of capital, and now have more than £600bn of high quality liquid assets. Moreover, as a backstop, and to support the functioning of markets, the Bank of England stands ready to provide more than £250bn of additional funds through its normal facilities.

IMF statement:

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today:

"We take note of the decision by the people of the United Kingdom. We urge the authorities in the U.K. and Europe to work collaboratively to ensure a smooth transition to a new economic relationship between the U.K. and the EU, including by clarifying the procedures and broad objectives that will guide the process.

"We strongly support commitments of the Bank of England and the ECB to supply liquidity to the banking system and curtail excess financial volatility. We will continue to monitor developments closely and stand ready to support our members as needed."

USA: Federal Reserve statement:

“The Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks, following the results of the U.K. referendum on membership in the European Union. The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.”

 

 

Arun Jaitley, FM, India, Statement:

We have just seen the final vote of the people of the United Kingdom in the referendum on whether to remain or leave the European Union. We respect the referendum’s verdict. At the same time, we are also aware of its significance in the days ahead and also for the medium term.

As I have often said, in this globalized world, volatility and uncertainty are the new norms. This verdict will, obviously, further contribute to such volatility not least because its full implications for the UK, Europe and the rest of the world are still uncertain. All countries around the world will have to brace themselves for a period of possible turbulence while being watchful about, and alert to, the referendum’s medium term impacts.

As regards, the Indian economy, we are well prepared to deal with the short and medium term consequences of Brexit. We are strongly committed to our macro-economic framework with its focus on maintaining stability. Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline, and declining inflation. Our immediate and medium-term firewalls are solid too in the form of a healthy reserve position.

As investors look around the world for safe havens in these turbulent times, India stands out both in terms of stability and of growth. India, as you are all well aware, is amongst the fastest growing major economies in the world today. Our growth and inflation prospects are further improving in the wake of the good monsoons that are now moving well across India.

The government and the Reserve Bank of India as well as other regulators are well prepared, and working closely together, to deal with any short term volatility. Our aim will be to smooth this volatility and minimize its impact on the economy in the short term. At the same time, for the medium term, we will steadfastly pursue our ambitious reform agenda—including early passage of the GST—that will help us realize our medium term growth potential of 8-9% and help achieve our objective of development for all.

Dr Raghuram G Rajan, Governor, RBI:

It looks increasingly clear that the United Kingdom has voted to exit the European Union. Markets are trying to factor the consequences of this development and this has already led to sharp corrections in financial markets around the world. The Indian economy has good fundamentals, low short term external debt, and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come.

The Reserve Bank of India is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including providing liquidity support (both dollar and INR), to ensure orderly conditions in financial markets.