Thursday 29 September 2016

'Explosive shock' as Ireland turns to 'Plan B' after Britain votes to leave EU

* Leave camp wins by 52-48 percent split
* PM Cameron will step down by October
* Irish officials are to embark on a series of trade missions to combat impact
* Sterling hits lowest level for three decades
* Cameron phoned Taoiseach to thank him for supporting Remain campaign
* More than $2 trillion wiped off world stocks
* Scottish leader says new independence vote likely

Guy Faulconbridge, Kate Holton and Kevin Doyle

Published 24/06/2016 | 19:23

A fall in the pound has implications for Ireland because it makes it more expensive for Irish exporters to sell their products in Britain. Photo: Reuters
A fall in the pound has implications for Ireland because it makes it more expensive for Irish exporters to sell their products in Britain. Photo: Reuters

Britain has voted to leave the European Union, forcing the resignation of Prime Minister David Cameron and dealing the biggest blow since World War Two to the European project of forging greater unity.

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Global financial markets plunged on Friday as results from a referendum defied bookmakers' odds to show a 52-48 percent victory for the campaign to leave a bloc Britain joined more than 40 years ago.

The pound fell as much as 10pc against the dollar to touch levels last seen in 1985, on fears the decision could hit investment in the world's fifth-largest economy, threaten London's role as a global financial capital and usher in months of political uncertainty. The euro slid 3pc.

World stocks saw more than $2 trillion wiped off their value. Big banks took a battering, with Lloyds, Barclays and RBS falling as much as 30pc.

Britain's FTSE 100 stock index recovered much of its early losses by the end of the day after the world's main central banks offered financial backstops.

Britain's decision to leave the European Union has sent shockwaves around the world - nowhere more than Ireland.

Prime Minister David Cameron speaks outside 10 Downing Street, London, with wife Samantha where he announced his resignation: Daniel Leal-Olivas/PA Wire
Prime Minister David Cameron speaks outside 10 Downing Street, London, with wife Samantha where he announced his resignation: Daniel Leal-Olivas/PA Wire
Prime Minister David Cameron speaks outside 10 Downing Street, London, with wife Samantha . Photo credit should read: Lauren Hurley/PA Wire

Read more: Revealed: The contingency plan drawn up by Irish officials in the event of a Brexit

Irish officials are to embark on a series of trade missions to Northern Europe, USA, China and India in an effort to combat any financial impact of the Brexit.

Details of Ireland ‘Plan B’ show that the Government intends to carry out a series of reviews in relation to trading markets, foreign direct investment opportunities and diplomatic relationships.

It states that preserving the Common Travel Area between Ireland and the UK “will be a key priority” during the negotiations that will lead to Britain’s formal exit from the EU.

Enterprise Ireland will also host an International Markets week in October in Dublin, to provide Irish exporters with access to its overseas market advisors.

Read more: Taoiseach has 12-minute phonecall with outgoing British Prime Minister David Cameron

The United Kingdom itself could now break apart, with the leader of Scotland - where nearly two-thirds of voters wanted to stay in the EU - saying a new referendum on independence from the rest of Britain was "highly likely".

An emotional Cameron, who led the "Remain" campaign to defeat, losing the gamble he took when he promised the referendum in 2013, said he would leave office by October.

"The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction," he said in a televised address outside his residence.

"I do not think it would be right for me to be the captain that steers our country to its next destination," he added, choking back tears before walking back through 10 Downing Street's black door with his arm around his wife Samantha.

Read more: Exclusive: Bertie Ahern - I’ll return to politics if there’s a vote for Ireland to leave EU

David Cameron phoned the Taoiseach this afternoon to thank him for supporting the Remain campaign and to discuss the fallout from the decision by UK voters to leave the European Union.

A spokesperson for the Taoiseach said they touched on “the closeness of the result” and Mr Kenny said he “understood the rationale for the PM’s stated preference for initiating negotiations with the EU after a new leader of the Conservative party has been selected”.

The two leaders agreed there should be “no interruption to the close bilateral work at political and official level on Northern Ireland”.

“Moreover, it was agreed that there would be immediate bilateral contact between senior officials on the issues of mutual interest arising from the referendum, including the common travel area and the border,” the spokesperson said.

The exchange was described as “warm” with both men recalling the strong personal relationships that they had built over the last number of years.

“The Taoiseach wished PM Cameron and his family the very best for the future and they both looked forward to meeting in person next week,” the spokesman concluded.

Read more: As David Cameron loses biggest gamble, Boris Johnson looks biggest winner

Quitting the world's biggest trading bloc could cost Britain access to the trade barrier-free single market and means it must seek new trade accords with countries around the world. A poll of economists by Reuters predicted Britain was likelier than not to fall into recession within a year.

The EU, which rose out of the ashes of two world wars fascist and communist totalitarianism to unite a continent of prosperous democracies, faces economic and political damage without Britain, which has the EU's biggest financial centre, a U.N. Security Council veto, a powerful army and nuclear weapons.

"It's an explosive shock. At stake is the break up pure and simple of the union," French Prime Minister Manuel Valls said. "Now is the time to invent another Europe."

German Chancellor Angela Merkel, who invited the French and Italian leaders to Berlin to discuss future steps, called it a watershed for European unification.

Her foreign minister, who will with France present other EU founding members with a plan for a flexible EU on Saturday, called it a sad day for Britain and Europe.

The result emboldened eurosceptics in other member states, with French National Front leader Marine Le Pen and Dutch far-right leader Geert Wilders demanding their countries also hold referendums. Le Pen changed her Twitter profile picture to a Union Jack and declared "Victory for freedom!"

The vote will trigger at least two years of divorce proceedings with the EU, the first exit by any member state. Cameron, in office since 2010, said it would be up to his successor to formally start the exit process.

Read more: Watch: TV presenter stunned as Nigel Farage breaks huge promise just one hour after win

His Conservative Party rival Boris Johnson, the former London mayor who became the most recognisable face of the Leave camp, is now widely tipped to seek his job.

"We can find our voice in the world again, a voice that is commensurate with the fifth-biggest economy on Earth," he told reporters at Leave campaign headquarters.

Lawmakers from the opposition Labour Party also launched a no-confidence motion to topple their leader, leftist Jeremy Corbyn, accused by opponents in the party of campaigning tepidly for its Remain stance.

"INDEPENDENCE DAY"

There was euphoria among Britain's eurosceptic forces, claiming a victory over the political establishment, big business and foreign leaders including U.S. President Barack Obama who had urged Britain to stay in.

"Let June 23 go down in our history as our independence day," said Nigel Farage, leader of the eurosceptic UK Independence Party, describing the EU as "doomed" and "dying".

The shock hits a European bloc already reeling from a euro zone debt crisis, unprecedented mass migration and confrontation with Russia over Ukraine. Support for anti-immigrant and anti-EU parties has surged across the continent.

U.S. presidential candidate Donald Trump, whose own rise has been fuelled by similar anger at the political establishment, called the vote a "great thing". Britons "took back control of their country", he said in Scotland where he was opening a golf resort. He criticised Obama for telling Britons how to vote, and drew a comparison with his own campaign.

Obama said he respected the UK vote to leave, and that the United States' relationship with Britain would endure.

Read more: 'I'm full of regret' - extraordinary moment Brexit voter changes her mind

Britain has always been ambivalent about its relations with the rest of post-war Europe. A firm supporter of free trade, tearing down internal economic barriers and expanding the EU to take in ex-communist eastern states, it opted out of joining the euro single currency and the Schengen border-free zone.

Cameron's ruling Conservatives in particular have harboured a vocal anti-EU wing for generations, and it was partly to silence such figures that he called the referendum.

The 11th hour decision of Johnson - Cameron's schoolmate from the same elite Eton private boarding school - to come down on the side of Leave gave the exit campaign a credible voice.

World leaders including Obama, Merkel, Chinese President Xi Jinping, NATO and Commonwealth governments had all urged a Remain vote, saying Britain would be more influential in the EU.

DARKEST HOUR

The four-month campaign was among the most divisive ever waged in Britain, with accusations of lying and scare-mongering on both sides and rows over immigration which critics said at times unleashed overt racism.

Read more: Boris Johnson hails 'glorious opportunity' as 'brave' David Cameron quits as Prime Minister  

At the darkest hour, a pro-EU member of parliament was stabbed and shot to death in the street. The suspect later told a court his name was "Death to traitors, freedom for Britain".

The campaign revealed deep splits in British society, with the pro-Brexit side drawing support from voters who felt left behind by globalisation and blamed EU immigration for low wages. Older voters backed Brexit; the young mainly wanted to stay in. London and Scotland supported the EU, but swathes of England that have not shared in the capital's prosperity voted to leave.

Support for Remain among Scots prompted Scottish First Minister Nicola Sturgeon to declare it "democratically unacceptable" for Scotland to be dragged out of the EU, two years after voting to stay part of the United Kingdom. "I think an independence referendum is now highly likely," she said.

The financial turmoil comes at a time when interest rates around the world are already at or near zero. The shock could prevent the U.S. Federal Reserve from raising interest rates as planned this year or even provoke a new round of emergency policy easing from central banks.

Left unclear is the relationship Britain can negotiate with the EU. EU officials have said UK-based banks and financial firms could lose automatic access to sell services in Europe.

Huge questions also face the millions of British expatriates who live freely elsewhere in the bloc as well as millions of EU citizens who live and work in Britain.

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