david cameron.jpg
Photograph: EPA/ANDY RAIN

Britain sought to calm markets on Monday, as the pound lost more ground and the ruling Conservative Party said it aims to choose a successor to Prime Minister David Cameron by September 2.

Chancellor of the Exchequer George Osborne said Britain's economy is "fundamentally strong" and remains open for business after the country's vote to leave the European Union.

"I want to reassure the British people, and the global community, that Britain is ready to confront what the future holds for us from a position of strength," Osborne said in his first public speech since Thursday's vote, which caused stock markets around the world to plummet and the pound to drop to levels not seen since 1985.

The Conservative Party's influential 1922 Committee of lawmakers said a new Conservative leader should be in place by September 2 to replace Cameron, in another move that could reassure investors after Cameron previously announced a deadline of early October for appointing his successor.

Nominations for leadership candidates will open on Wednesday and close on Thursday, after which Conservative members of parliament will select two candidates for a vote by the party's members, the committee said following an emergency meeting on Monday.

Speaking in parliament later Monday, Cameron said negotiations on Britain leaving the EU should wait until the leadership election is over and "will begin under a new prime minister."

Several EU leaders have said negotiations should begin as soon as possible, but Cameron said the government will not trigger negotiations "at this stage."

Britain must first "determine the kind of relationship we want with the EU" before invoking Article 50 of the Lisbon Treaty, he said in his first address to lawmakers since Thursday's referendum.

Cameron offered to resign on Friday after his failed campaign to persuade a majority of voters to back his plan for Britain to remain in a reformed European Union.

Boris Johnson, who co-led the Vote Leave campaign, and pro-Remain Home Secretary Theresa May are the two favourites to succeed Cameron.

In Osborne's comments - which came before markets opened on Monday and after the pound fell an additional 2 per cent against the dollar in overnight trading - he said it was inevitable that the economy would have to adjust.

He warned that it "would not be plain sailing," with volatility in financial markets likely to continue, but he said the country was "equipped for whatever happens."

Contingency plans were ready to be put into action in case of further volatility, Osborne said, after discussions over the weekend with Bank of England Governor Mark Carney.

Following the vote to leave, "some firms are continuing to pause their decisions to invest, or to hire people," he warned.

"As I said before the referendum, this will have an impact on the economy and the public finances - and there will need to be action to address that," Osborne said, referring to his suggestion before the vote that an emergency budget would be needed if Britain voted to leave.

Writing in The Telegraph on Monday, Johnson said reports on the negative consequences of the referendum "are being wildly overdone, and the upside is being ignored."

"The stock market is way above its level of last autumn," Johnson said.

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