Insights

EU Shock Wave: The Latest from London as Market Upheaval Continues

| By Paul Harris

Enormous political and economic upheaval continued this morning in the aftermath of the UK’s historic decision to leave the European Union.

Stock traders and commentators struggled to keep pace with changing events in London, amid political interventions to calm markets on the one hand, and talk of political coups on the other.

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At the start of Monday trading, chancellor George Osborne sought to reassure markets that had been sent into a tailspin on Friday after the shock EU referendum decision.

“The Bank of England stands ready to provide GBP250 billion of funds through its normal facilities to continue to support banks and the smooth functioning of markets,” said Osborne, himself under enormous pressure having been a key figure in the failed campaign to remain within the EU.

“It will not be plain sailing in the days ahead. But let me be clear. You should not underestimate our resolve. We were prepared for the unexpected and we are equipped for whatever happens.

“We are determined that unlike eight years ago Britain’s financial system will help our country deal with any shocks and dampen them, not contribute to those shocks and make them worse.”

As of 4am MDT, the pound continued to struggle against the U.S. dollar. It was down to GBP1.3221. Among the banks, shares in Barclays and RBS were also down significantly. Brent oil was up 5 cents, to US$48.46.

For the latest market update visit: http://www.bbc.co.uk/news/business-36636853

For an overview of the initial reactions to the UK Brexit vote, click here for Friday’s article.

The UK also witnessed today tremendous upheaval within the Labour Party, the official opposition to outgoing Prime Minister David Cameron’s Conservative Party.

A fleet of Labour shadow cabinet and shadow ministers have resigned their positions in protest at the leadership of Jeremy Corbyn, in what has been described by many as an attempted “political coup” to oust the left-wing leader.  Corbyn announced this morning a new shadow cabinet. Further developments are anticipated within the next 48 hours.

And within the nation at large, there continues to be widespread dismay among the 48% of the UK that voted to remain within the EU. While London and Scotland voted resoundingly to remain, large parts of the rest of the UK voted to leave, a choice that has largely been characterized as a vote against immigration and a protest at governance from Brussels.

With Prime Minister Cameron announcing his decision last Friday to resign by the fall, debate is intensifying over who should take his place. Boris Johnson, the former Mayor of London and the chief figurehead of the successful “Leave” campaign, is the front-runner.

Before the vote took place last week, chief executives at three of the top four UK oil and gas producers publicly urged voters to remain within the European Union. Among them were CEOs at Anglo-Dutch Royal Dutch Shell, BP Plc. and France’s Total, who featured in media outlets in a list of prominent pro-EU business leaders, together with executives from Centrica plc and smaller producers active in the UK such as EnQuest plc, ENGIE, MOL and BHP Billiton.

According to data from Evaluate Energy, the energy executives who declared in favour of staying control approximately 510,000 boe/d of UK North Sea production.

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Source: Evaluate Energy

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