7.15am Update: Britain decides
Turmoil ahead as Britain votes to quit EU
Britain has made the historic decision to withdraw from the EU, prompting a likely day of turmoil on the markets and questions over the future of the Prime Minister.
Already there is talk of David Cameron resigning and being replaced by Boris Johnson who led the Leave Campaign.
Sterling plunged to its lowest level against the dollar since 1985 and the London stock market was expected to open sharply lower.
The Bank of England will make a statement amid speculation that the stock market may be suspended if there is excessive volatility.
The Leave campaign won by a majority of 1,269,501 votes.
Senior EU officials in Brussels worked through the night and were expected to make a statement on how they deal with the departure of one of the bloc’s biggest members amid speculation that other countries may seek their own exit.
Sterling plummeted by more than 10%, its biggest ever one-day fall and eclipsing the crises of ‘Black Wednesday’ in 1992 and the 2008 global financial crisis.
London bankers working through the night said they hadn’t seen anything like the volatility sweeping across UK assets.
Nigel Green, founder and chief executive of deVere Group, which has more than $10bn under advice, said: “The votes are still being counted and it really is down to the wire. We’re currently in unchartered waters.
“This is being reflected on the markets. The markets are spooked at the increasing chance of a Brexit. For example, the pound has plummeted by 10%. The markets, it seems, have already decided it is a Leave win.
“It goes to show just how falsely complacent they were before the count began.
This enormously split vote represents an enormously split country and this will, undoubtedly, lead to continued and increased volatility in financial markets.
“Should Leave vote win, we can expect a highly turbulent time in the markets created by huge uncertainty.”
Chris Towner, chief economist at HiFX, said: “With 60% of the vote now in, the probabilities are looking that the UK will leave the EU. Sterling has dropped more than 15 cents. Having touched 1.50 it is now dealing below 1.35, 10% lower. This is the lowest level for GBP/USD since 1985. Trading is frenetic and volumes are low with very nervous pricing as the results come in.
“We still have a lot of votes to come; however the market cannot ignore the momentum and the reality of where the UK is heading.”
Safe havens such as gold and the Japanese yen are surging in value. The Japanese are watching the moves in their currency closely. GBP/JPY has dropped from trading at a high of 160 only a few hours ago to 135, a 15% move.
The Euro has suffered too as the implications run beyond the UK borders into the heartland of Europe. Asian stock markets are already down more than 3%.
Investors who had been buying into the stock market in expectation of a Remain victory are likely to get their fingers burnt. The FTSE 100 is predicted to fall by more than 300 points when the market opens at 8am amid speculation that trading may have to be suspended if there is too much volatility.
Scotland voted solidly to remain in the EU, but provincial England and Wales backed the Brexit option.
Prime Minister David Cameron‘s position will come under pressure if Britain does vote to leave the EU, despite 84 Tory MPs writing to him to say he has a duty to lead the country whichever way the vote goes.
Mr Cameron has led the Remain campaign and critics say his position will become untenable. Whoever takes the lead, it will require formal application to leave and the negotiations will take two years.
A Leave vote will also trigger another constitutional debate in Scotland, especially as the country is on course to vote substantially in favour of remaining in the EU.
UKIP leader Nigel Farage, speaking at 4am with Leave more than 420,000 votes ahead, said: “Dawn is breaking on an independent United Kingdom. This will be a victory for real, decent people. Let 23 June go down as independence day.”
Later he said he hoped other countries would follow Britain which had “kicked the first brick out of the wall” of the unelected EU. He called for Britain to form a “Brexit government”.
There was no word from either Boris Johnson or Michael Gove who have led the Leave campaign.
The turnout, at 72%, is higher than the General Election, but lower in Scotland than for the independence referendum.