British EU exit turmoil alarms Asia, rocks Labour opposition

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Updated: June 26, 2016 6:28:10 PM

Turmoil unleashed by Britain's vote to leave the EU engulfed the opposition Labour Party while policymakers as far away as China, Japan and South Korea fretted on Sunday over the threat to global financial stability, hours before markets reopen.

His health chief responded by resigning, calling for a new leader and reflecting accusations among pro-EU lawmakers that Corbyn's failure to win over traditional Labour voters had played a major role in the referendum result. (Reuters)His health chief responded by resigning, calling for a new leader and reflecting accusations among pro-EU lawmakers that Corbyn’s failure to win over traditional Labour voters had played a major role in the referendum result. (Reuters)

Turmoil unleashed by Britain’s vote to leave the EU engulfed the opposition Labour Party while policymakers as far away as China, Japan and South Korea fretted on Sunday over the threat to global financial stability, hours before markets reopen.

In the oldest parliamentary democracy, three million Britons have signed a petition calling for a re-run of Thursday’s referendum that split the nation, and one opinion poll showed a strong majority of Scots now want to break with the United Kingdom rather than with the European Union.

Labour’s left-wing leader Jeremy Corbyn sacked his foreign policy chief as the party plunged into open conflict.

His health chief responded by resigning, calling for a new leader and reflecting accusations among pro-EU lawmakers that Corbyn’s failure to win over traditional Labour voters had played a major role in the referendum result.

Sacked foreign affairs spokesman Hilary Benn also called for Corbyn, who was elected last year largely by left-wing party members and supporters, to go. “He is a good and decent man but he is not a leader,” Benn told BBC television.

The 52-48 percent referendum vote marked the biggest blow since World War Two to the European project of forging greater unity across the continent.

Sterling fell as much as 10 percent against the dollar on Friday to levels last seen in 1985, while world stocks saw more than $2 trillion wiped off their value. The weekend gave some respite from the turmoil, but with markets opening shortly in Asia, anxiety is growing.

Prime Minister David Cameron resigned on Friday after Britons ignored his passionate appeals to stay in the EU, but left formally notifying Brussels of Britain’s exit to his successor, who is unlikely to be in office for about three months. That signals a long period of limbo.

Chinese Finance Minister Lou Jiwei said the vote “will cast a shadow over the global economy”.

“It’s difficult to predict now,” he said at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing. “The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view.”

Japan likewise fretted over the effect on the global currency market and contemplated official action. “Speculative, violent moves have extremely negative effects,” said Tomomi Inada, policy chief of the ruling LDP party. “If necessary, the government should not hesitate to respond, including currency intervention,” Nikkei daily quoted him as saying.

Prime Minister Shinzo Abe has tried to engineer a weaker yen to encourage exports to help revive the Japanese economy. But after initial success, investors have sought safety in the yen this year due to stock market turmoil and now the Brexit vote, pushing the currency back up.

NO RESPITE

South Korea’s finance minister also said he feared international markets will remain volatile throughout negotiations on the British exit.

The United States, which during campaigning made clear it wanted Britain to stay in the EU, also showed signs of unease.

Secretary of State John Kerry will meet EU foreign policy chief Frederica Mogherini in Brussels and British Foreign Minister Philip Hammond in London on Monday.

The visit is largely meant to offer symbolic reassurance at a critical juncture for Europe, but a senior U.S. official said Kerry would also stress the importance of other members not following Britain’s lead and further weakening the EU.

Despite the international expressions of concern, respite from the uncertainty is unlikely for months, at the very least.

Cameron has offered to stay on as a caretaker, but he has refused to invoke Article 50 of the EU’s Lisbon Treaty, which allows for two years of exit negotiations. Instead he left that job to his successor, who is due to be elected by his Conservative Party sometime before its annual conference in October.

Only after the new leader has invoked can work on thrashing out Britain’s new relationship with the bloc begin. The man widely tipped as the next prime minister is former London mayor Boris Johnson, the most prominent member of the campaign to leave the EU.

NO LYING DOWN

Signs are growing that not all the 16 million Britons who voted to stay in the EU are willing to take the result lying down. Many flocked to back an online petition demanding a second vote, with signatures exceeding three million on Sunday morning, more than double the figure the previous afternoon.

The petition, posted on parliament’s website before the referendum, said there should be another vote if the outcome was close on a turnout of less than 75 percent – three points above Thursday’s figure.

It will have to be considered for debate by lawmakers, but has no legal force and its backers compare with the 17.4 million who voted “leave”.

The referendum has also re-energised support for Scotland, which voted overwhelmingly to remain in the EU, to break away from the United Kingdom instead.

An opinion poll in The Sunday Post said 59 percent of respondents backed independence, rocketing from 45 percent of votes cast in a referendum in 2014.

Scottish First Minister Nicola Sturgeon has said a fresh independence referendum is possible

“My challenge now as first minister is to work out how I best protect Scotland’s interests, how I try to prevent us being taken out of the EU against our will with all of the deeply damaging and painful consequences that that will entail,” she told the BBC’s Andrew Marr show.

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