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Friday, 24 June 2016 22:00

Your Highness, Your Say in the Matter... Featured

Your Highness, Your Say in the Matter...

While the British politicians, analysts, experts debated whether Brexit is a "Disaster" or an "Independence Day" for the UK, the indices of global stock markets fell on average by 5%, in particular, the fall of FTSE index was more than 500 points down to 5808.72, the August futures at FTSE decreased to 7%.

Elsewhere in Europe, the shockwaves caused by the UK's vote to leave the European Union are being felt. The DAX was down 6.78%, France's CAC market was down 7.9% and in Madrid, the Spanish market ended the day down 12.68%, its worst fall than ever.

As soon as the vote results were declared, the shares of the European majors BP and Shell fell by 5.82% and 5.77% at the beginning of the trading respectively.  An even sharper decline has been fixed on shares of other British independent companies. For example, shares of Enquest fell by 13.6%, Premier Oil – 10.67%, while shares of the Irish company Tullow Oil fell by 7.84% (http://www.caspianenergy.net/ru/neft-i-qaz/34628-bp-shell-brexit).

Stocks around the world have faced losses worth billions, and the wave effect has reached all asset classes and regions. The fall in oil prices has reversed the trend of the recent rise in prices, which have grown by about 60% since the end of last year.

Island mentality of the British, which won the continental European solidarity by a majority of just 4% came expensive for the world economy, but at the same time it increased the trading volume and the dynamics of transactions.

 

FTSE / http://www.telegraph.co.uk

 

There is no hiding the fact that we wanted a different outcome of yesterday’s referendum,” the president of the European council, Donald Tusk said in Brussels on Friday.

“There is no way of predicting all the political consequences of this event – especially for the UK. It is a historic moment, but not a moment for hysterical reactions”, he noted.

Tusk promised to convene informal discussions without the British prime minister, David Cameron, on the margins of a scheduled EU summit next week, as well as a wider reflection on the future of the union. “What doesn’t kill you makes you stronger,” President of the European Council quoted Nietzsche’s aphorism.

EU leaders and officials will spend Friday scrambling to prepare for a pre-summit crisis session this weekend. Priorities will be preventing further Eurosceptic contagion spreading through EU ranks – and the euro currency.

Warning notes made by IMF in particular, are noteworthy in this regard.

Head of IMF Christine Lagarde urged the authorities in the U.K. and Europe to work collaboratively to ensure a smooth transition to a new economic relationship. “We strongly support commitments of the Bank of England and the ECB to supply liquidity to the banking system and curtail excess financial volatility. We will continue to monitor developments closely and stand ready to support our members as needed".

Commenting on the British referendum, German Chancellor Angela Merkel called to analyze the situation calmly and not to rush into decisions. She stressed that the United Kingdom and the European Union should maintain close ties with each other in the future.

After the Brexit, Berlin made it clear that attempts will be made to give her (Great Britain) an “Associate Partner” status. London at the same time will not be allowed to trade freely on the EU markets in order to prevent provocations for similar attempts.

Germany will start implementing an emergency plan, which has been developed in case of the UK living the EU and provides an ultimate goal aimed at providing an “Associate Partner” status to EU.  Handelsblatt edition has familiarized itself with the eight-page document, prepared by the Ministry of Finance of Germany (http://www.handelsblatt.com/politik/international/brexit-referendum/brexit-news/eu-ohne-grossbritannien-der-brexit-wird-fuer-deutschland-teuer/13783492-2.html).

"Germany’s Strategy regarding the UK’s decision to live the EU» says that London will be "offered constructive negotiations". These discussions will not be easy, the German Ministry of Finance warns. Discussed at these negotiations will be Great Britain’s leaving the European Investment Bank, budgetary rights and obligations. Besides, the question whether the United Kingdom will be able to preside in the EU next year as it was planned, will be raised.

According to the European legislation, at least two years are given for the transitional period in the case of the country's leaving the European Union. In particular, " the automatic access to the EU internal market is out of question," the document says. The edition explains that if the UK enjoys the benefits of the European market, without being a member of the EU, then other states would follow it.

"The scope and effect of imitation will largely depend on the way that the UK is treated", - document of the German Ministry of Finance states.

As a reminder, according to the results of the referendum, the majority of the British (51.9%) spoke for the country’s leaving the EU. Prime Minister David Cameron, who initiated the expression of the popular will but stood for the retention of the membership in the EU, has already announced about the resign after having an audience with Queen Elizabeth II at the Buckingham palace. “I had a conversation with Her Majesty this morning and I informed her about steps that I am taking”, British Media quotes the Premier on Friday. “I think that we should have the new Prime Minister appointed before the beginning of the October conference of conservatives”, he stated. The conference will last from October 2 to 5 in Birmingham.

But what will happen now when the "spear of politicians are broken and the mist over the Foggy Albion dissipates?”, who will protect the British business and the world market closely associated with it from the implications of Brexit. It is likely that the following audience with the Queen of Great Britain will show what the next steps of the British government are. In other words, “Your Highness, Your Say in the Matter...”

 

Natalya Aliyeva

President and Editor-in-Chief of the Caspian Energy International Media Group

 

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