Europe

UK plunges deeper into political crisis

Britain's Prime Minister David Cameron is due to meet with European Union leaders in Brussels as world officials and markets work out how to handle Brexit.

Britain has plunged deeper into political crisis after its vote to leave the European Union last Thursday, leaving world officials and financial markets confused about how to handle the political and economic fallout.

Britain's Prime Minister David Cameron is expected to stay on in a caretaker role until the UK Conservative Party elects a new leader in about three months, after he resigned on Friday.

But he has refused to invoke Article 50 of the EU's Lisbon Treaty, which allows for two years of exit negotiations, leaving little clarity about how or when Britain will begin negotiations with the EU on a new relationship.

In the referendum, voters ignored Cameron's appeals to stay in the EU by 52 per cent to 48 per cent, delivering the biggest blow since World War Two to the European project of forging greater unity.

Cameron is expected to meet the other 27 EU leaders at a summit in Brussels on Tuesday.

British Finance Minister George Osborne, who had warned during the campaign that a "Brexit" would cause financial market volatility, scheduled a statement for 7am (local time) on Monday to provide reassurance about "financial and economic stability".

Boris Johnson, the leading "Leave" campaigner, former London mayor and favourite to become the next Conservative prime minister, sought to calm fears about Britain's economic future, saying it would continue to have access to the EU single market.

But Johnson did not explain how he planned to secure free trade with Europe without sacrificing some of the main promises that "Leave" campaigners made to voters, notably that Britain would be able to cut immigration and free itself from regulations set in Brussels.

Cameron's Conservatives have been at war with each other for years over whether to quit the EU. But the vote to leave a bloc that Britain joined 43 years ago also pushed the UK Labour party into chaos over the weekend.

Senior Labour Party parliamentarians withdrew backing for their leader after traditional supporters rejected the party's pro-EU stand in droves.

Scotland's leader promised she would do whatever it takes to keep her strongly pro-EU country in the bloc, including potentially vetoing legislation on a British exit.

French President Francois Hollande declared there was no going back on "Brexit", saying: "What was once unthinkable has become irreversible".

Hollande said France and Germany must use their strong friendship to seize the initiative, warning that "separated, we run the risk of divisions, dissension and quarrels".

He and Chancellor Angela Merkel discussed the issue by phone and an aide said they were in "full agreement on how to handle the situation".

The EU is preparing to move its European Banking Authority from London following Britain's vote to leave the Union, EU officials said on Sunday, setting up a race led by Paris and Frankfurt to host the regulator.

The United States, which had made clear it wanted Britain to stay in the EU, also showed signs of unease. US Secretary of State John Kerry will visit Brussels and London on Monday.

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