UK treasury chief seeks to calm markets as pound falls again

Chancellor of the Exchequer George Osborne sought to calm markets as the pound fell again on Monday, saying 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.

In his comments, made before markets opened on Monday and after the pound fell an additional 2 per cent against the dollar in overnight trading, Osborne 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.

Fellow Conservative Boris Johnson, who co-led the Vote Leave campaign, 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; the pound remains higher than it was in 2013 and 2014," Johnson wrote in The Telegraph.

Johnson praised Carney, Prime Minister David Cameron and Osborne for ensuring "the fundamentals of the UK economy are outstandingly strong - a dynamic and outward-looking economy with an ever-improving skills base."

Osborne campaigned for a remain vote in the referendum and is a close ally of Cameron.

Cameron resigned on Friday and Osborne has faced some calls to follow suit. Johnson is widely seen as one of the favourites to succeed Cameron.

Osborne said he hopes Britain will not "turn its back on Europe or the rest of the world."

"We must bring unity of spirit and purpose and condemn hatred and division wherever we see it," Osborne said. "Britain is an open and tolerant country and I will fight with everything I have to keep it so."

US Secretary of State John Kerry said he and Israeli Prime Minister Benjamin Netanyahu had agreed during talks in Rome on Monday that the global community can "minimize any kind of collateral negative effect" from the Brexit vote through "leadership and effort by all of the parties to calm the waters and move in a steady way."

Kerry is scheduled to meet British Foreign Secretary Philip Hammond later Monday in London.

Last update: Mon, 27/06/2016 - 12:53

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