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London - Chancellor of the Exchequer George Osborne heads to Wall Street on Monday aiming to shore up investor confidence in the UK’s economy and financial markets roiled by the vote to quit the European Union.
Leaving behind what’s set to be another week of political disarray at home, Osborne is embarking on a two-week shuttle tour of the US, China and Singapore in a bid to persuade financiers to stick with the UK as it prepares to end its union with the world’s largest trading bloc.
“While Britain’s decision to leave the EU clearly presents economic challenges, we now have to do everything we can to make the UK the most attractive place in the world to do business,” the chancellor said in a statement. “My message to the world is that Britain may be leaving the EU, but we are not quitting the world.”
It’s a tall order. He’ll be mounting a public relations exercise at a time when the pound has slumped to a 31-year low against the US dollar and real-estate funds are being frozen to avoid fire sales. Further undermining sentiment in the country is the two-month wait to discover the identity of the next prime minister, and discord gripping the opposition Labour Party.
“It is still too early to claim that we can see the bottom of the political and economic disaster unraveling in the UK,” Erik Nielsen, chief economist at UniCredit Bank AG, told clients in a report on Sunday. “You should expect more downside for the pound, and it’s probably not the end yet of the evolving real estate crisis.”
Economy that works
Home Secretary Theresa May, one of two candidates to succeed David Cameron as prime minister, used an article in the Times newspaper to signal she will pull away from the fiscal austerity that has been a hallmark of Osborne’s chancellorship.
“We need an economy that works for everyone,” May said, proposing to limit executive pay and put workers on company boards. “We need to reform the economy to allow more people to share in the country’s prosperity."
In a sign global policy makers are readying for a so-called Brexit, President Barack Obama and German Chancellor Angela Merkel both said they expect the UK to leave the EU as per the June 23 referendum.
Attending a meeting of the North Atlantic Treaty Organisation in Warsaw, Obama said he assumed the choice “is going to stick.” Merkel told ZDF “in my view, the decision has been taken.”
Bank of England
Osborne will meet some of America’s biggest investors in New York before holding talks later in the week in London with US Treasury Secretary Jacob J. Lew, his office said. He will also journey to see for-now fellow European Union finance ministers in Brussels.
In an article published in the Wall Street Journal on Monday, Osborne revealed that he had already spoken to House Speaker Paul Ryan several times in the past two weeks about building a stronger trading relationship with the US.
The trips come days after he met executives from banks including Goldman Sachs and JPMorgan to defend London’s status as a financial capital. He has also spoken with Chinese officials to maintain trade ties.
Such meetings may burnish his credentials as a future foreign secretary if the next prime minister decides to move him from the Treasury he has run since 2010. They also may deflect criticism that Bank of England Governor Mark Carney is alone at the helm of the UK economy following the Brexit vote.
The central bank will cut interest rates this week for the first time since 2009, according to 29 of 53 economists surveyed by Bloomberg.
QuickTake Q&A: How UK and Europe might relate after breakup
Meantime, the contest to replace Cameron as leader of the Conservative Party and prime minister turned personal over the weekend. Energy Minister Andrea Leadsom sparked a furor by suggesting that being a mother might make her a better leader than rival May.
Leadsom also drew barbs from Foreign Secretary Philip Hammond, who said she lacks the international credentials to be prime minister and that most of his counterparts didn’t know who she was.
Leadsom told the Daily Telegraph she had apologized to May personally “for any hurt caused” and said she had found the criticism “shattering.” Tim Loughton, Leadsom’s campaign manager, responded to critics by telling the BBC’s “Andrew Marr Show” that the party “establishment” doesn’t want her to replace Cameron.
Writing in the Sun on Sunday, May repeated her assertion that “Brexit means Brexit” and there “must be no attempts to remain inside the EU, no attempts to rejoin it by the back door and no second referendum.” The comments may be an attempt to head off criticism that she won’t pursue Brexit wholeheartedly after she sided with the campaign to stay.
Brexit Backers
The support that might count for Leadsom is from Leave .EU, bankrolled by businessman Arron Banks, the Brexit campaign’s biggest donor. It is using access to its 96 000 followers on Twitter and 77 000 likes on Facebook to make the case for the underdog. Banks said in an interview on BBC on Sunday that May would be “the death of Brexit by a thousand cuts.”
While a winner is not scheduled to emerge until September 9, Conservatives will find comfort from the Labour Party also being in crisis.
QuickTake Q&A: Investors flee UK real estate funds Post-Brexit
Former Business spokeswoman Angela Eagle is planning to announce a leadership bid on Monday to challenge Jeremy Corbyn; the embattled opposition leader has seen dozens of his team quit, lost a no-confidence vote and heard calls from party elders to go.
Corbyn is relying on the party’s grassroots members to survive, telling BBC on Sunday that he’ll take on any rival.
“You would be surprised how much support there is out there from people who feel that I was elected a year ago with a very large majority and a very large mandate,” said Corbyn. “We’re a party that’s going places and doing very well actually.”
The disregard the political class is now held in was even on show at the Wimbledon tennis tournament. When British winner Andy Murray used his acceptance speech to note Cameron was in the crowd there were boos as well as cheers.
“Playing in a Wimbledon final is tough, but I certainly wouldn’t like to be the prime minister, it’s an impossible job,” said Murray, a Scotsman.
