EU Calls for ‘Orderly’ Brexit

European Union leaders called for an orderly British withdrawal from the bloc to minimize instability as they pledged to learn lessons from the U.K.’s political earthquake and do better at serving their citizens.

As EU government chiefs took the historic step of meeting without one of the bloc’s members for the first time, they lamented the British decision to part ways then began to lay plans for a new union minus its second-largest economy. They also insisted that any negotiations on Britain’s future relationship wouldn’t be started until it gave official notification of departure.

“There is a need to organize the withdrawal of the U.K. from the EU in an orderly fashion,” leaders of the 27 other nations will say in their final statement, according to a draft obtained by Bloomberg News. While the decision to trigger secession talks lies with Britain, and they can wait until a new prime minister is in place, “it would be preferable to do this quickly so as to avoid entering into a prolonged period of uncertainty.”

Banks and the pound bore the brunt of the market turmoil unleashed by the U.K.’s June 23 vote to quit the EU after more than four decades, an upset that triggered a political and economic earthquake that reverberated across Europe.

Companies Cooling

Companies are already cooling on the U.K. Vodafone Group Plc said it will consider moving its headquarters unless the country negotiates continued access to the European Union’s single market. Siemens AG said it will freeze new power investment in the U.K. until it has further clarity on relations with the rest of the EU.

After David Cameron left the European stage on Tuesday night amid talk of regret and disappointment, the EU leaders who continued to meet without him began to look ahead. As the U.K. occupies itself with the battle over its next prime minister, the opposition Labour party tears itself apart and Scotland takes its own track to strengthen ties to Europe, the EU is already pondering how it must change.

Many leaders across Europe have an eye on anti-EU forces seeking to capitalize on the British vote to push their own causes. With elections due in France, Germany and the Netherlands in 2017, countries that together make up more than half the euro-area economy, the U.K. result is proving to be a wake-up call.

“The outcome of the U.K. referendum creates a new situation for the European Union,” the leaders will say, according to the draft. “Europeans expect us to do better when it comes to providing security, prosperity and hope for a better future. We need to deliver on this.”

Wednesday was not about taking concrete decisions on what an EU of 27 nations will look like. Leaders instead agreed to pause for “political reflection on the future” and return to the issue at an extra summit in September in Bratislava, Slovakia. By then, they hope what sort of partner Britain will be will have become clearer.

“The situation is extraordinary,” Lithuanian President Dalia Grybauskaite said on the way into Wednesday’s meeting. “We will meet any time necessary.”

Bloomberg

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell