Some experts are hopeful about the economic fallout, but leadership battles embroil both major parties.Britain confronted the prospect of political chaos Monday morning, three days after the country voted for in a referendum to leave the European Union. The response to Brexit in the UK was chaotic — Prime Minister David Cameron announced he would be stepping down; the value of the pound tumbled to its lowest in at least three decades — and it now appears that the weekend offered no respite, with sterling sliding to 2% on Monday morning.
Cameron’s plans for resignation have created a tense power vacuum in the country’s ruling Conservative Party, with former mayor of London Boris Johnson, who supported Brexit, tipped as a candidate to replace him.
But a far more dramatic fallout is taking place in the opposition Labour Party, whose leader Jeremy Corbyn faces a coup. In the days following the referendum, at least about dozen of Corbyn’s shadow cabinet have resigned in protest against what they see as his poor performance during the Brexit debates and his inability to adequately lead.
“After last Thursday’s disastrous Brexit vote, I no longer believe we can win a General Election with you as the leader of the party,” Steve Reed, a Member of Parliament who served as Corbyn’s shadow minister for local government, wrote in his resignation letter, which he posted on Twitter.
Meanwhile, Chancellor of the Exchequer George Osborne, the British government’s top Financial Minister, held a press Conference early Monday morning in an apparent effort to stabilize the London markets before they opened. Citing positive development statistics, he assured his audience that the country was “prepared for the unexpected and … equipped for whatever happens.”
“It will not be plain sailing in the days ahead, but let me be clear: you should not underestimate our resolve,” he said.
He went on to advise against implementing Article 50 of the Lisbon Treaty — the mechanism that would formalize Britain’s process of departing from the E.U. — until “there is a clear view about what new arrangements” the U.K. could obtain with the rest of Europe. He stressed that during these negotiations, standard E.U. policies on the movement of persons and the exchange of goods and services would remain unchanged.
He also conceded that fallout from the Brexit vote “will have an impact on the economy and the public finances,” though the Guardian observed on Monday morning that his comments had apparently tempered the early-morning market response. After a sharp falling off on Friday, the FTSE-100 Index had recovered somewhat over the weekend, then fell only slightly after opening on Monday.
Marcel Thieliant, a senior economist with Capital Economics, a global economic-research firm, tells TIME that he is not particularly anxious about the state of the global economy in the wake of the Brexit aftershock.
“We’ve already seen a rebound in the [major Japanese stock index] Nikkei, which is encouraging, because it’s usually one of the most-hit markets when we have some period of weakness,” he says.
He also suggests that markets have been overreacting. “The U.K. economy will not do as badly as most have feared,” he says, “because at least in the short term, nothing much will change. It will take some time before the country leaves.”