Brexit - What will happen next?

TOKYO, Japan - July 6, 2016 - PRLog -- At exactly 06:00 BST on 24 June it was confirmed that the UK had voted to leave the European Union. The first thing to stress is that the UK will not leave immediately. The UK is still a member of the EU and will probably remain so for several years. But the vote has already triggered an extraordinary chain of events.

In a statement outside Downing Street, David Cameron said the government would respect the result and carry out the instructions of the British people, reassuring the 2.9 million EU citizens in the UK that they will not be adversely affected.

Although it was his responsibility to remain in No 10 to "steady the ship", he announced he would step down in the autumn as he was not the right "captain to steer the country to its next destination".

A new Conservative leader and prime minister is expected to be elected by 9 September.

Under the party's existing rules, Conservative MPs would hold a series of ballots, with all but the two most popular candidates being eliminated. The final two will then go into a run-off in which all Conservative Party members will get a vote. This was the system used to elect Mr Cameron in 2005.

Market Reaction:

The FTSE 100 index of leading shares fell 8% after opening in London on Friday. There was a big sell-off of bank shares and housebuilders, with Barclays and RBS at one point down by more than 30%. By the end of trading, the index had bounced back, closing 2.8% down. The FTSE 250 index closed down 7% on Friday.

The value of the pound has also been hit hard on the foreign exchange markets, tumbling to lows not seen since 1985. At one stage, it hit $1.3305, a fall of more than 10%, although it too slightly recovered to close down 9% at $1.36.

Chancellor George Osborne made a statement before the UK stock market opened on Monday in a bid to calm the markets. He said there would still need to be an "adjustment" in the UK economy, but added it was "perfectly sensible to wait for a new prime minister" before taking any such action.

Bank of England governor Mark Carney - who is likely to emerge as a key figure in the coming days - said some "market and economic volatility" could be expected in the wake of the Brexit vote but the Bank was well prepared. He said it stood ready to offer all necessary assistance to ensure financial stability, including £250bn of extra liquidity for the banking system and potential support for sterling.

Business leaders have appealed for calm but also more clarity over how the process of leaving the EU will proceed and who will lead it. A number of firms have said they will review their investment in the UK. Sources within Morgan Stanley have told the BBC that the bank is stepping up a process which could see up to 2,000 of its London-based investment banking staff being relocated to Dublin or Frankfurt.

Kaufman Franz will be following the Brexit developments very closely and as such will be advising clients on how to navigate the markets.

Kaufman Franz is a leading Private Equity & Wealth Management Firm based in Tokyo, with offices in Austria and New York. For more information please visit: http://kaufmanfranz.com