UK economy will take a hit from Brexit

Chancellor George Osborne tried to calm markets following the shocking Brexit referendum results in his first post-vote statement.

Standing by forecast of adverse effects on the economy made during the referendum campaign, British finance minister George Osborne said on Tuesday that tax rises and spending cuts will be needed to deal with the “shock” to the United Kingdom economy caused by Brexit. On Tuesday, Osborne said that specific decisions on future austerity would be left to the next prime minister.

Osborne – who has kept a low public profile since the Brexit vote – said it was “inevitable” that the United Kingdom economy would face an “adjustment” in the wake of the Brexit vote, though he steered clear of repeating explicit warnings of recession made during the referendum campaign.

Only the United Kingdom can trigger Article 50, and in Osborne’s judgement the United Kingdom should only do that when there is a clear view about what new arrangement it is seeking with its European neighbours.

“We have discussed the need to prepare for the negotiations and in particular the fact that the British government will not be triggering Article 50 at this stage”, he said.

But he warned: “It will not be plain sailing in the days ahead”.

He had not spoken since the Leave campaign won Thursday’s referendum.

“While I completely accept the result, I am not the person to provide the unity the party needs”. An estimated 1.2 million Britons live in other European Union countries, many of them in France, Spain and Portugal, according to Britain’s House of Commons library.

According to Osborne, “it is already evident that as a result of Thursday’s decision, some firms are continuing to pause their decisions to invest, or to hire people”.

“The Governor [of the Bank of England] and I have been in regular touch with each other over the weekend – and I can say this this morning: we have further well-thought-through contingency plans if they are needed”.

They said they expect the referendum outcome to chop a cumulative 2.75% off United Kingdom gross domestic product in the next 18 months and have knock-on effects in the U.S. and European economies.

Osborne refused to say whether he regretted British Prime Minister David Cameron’s decision to put European Union membership to a popular vote.

He did not comment on whether he would be in the running to succeed Cameron, saying he would address questions about his future role in the Conservative party in the coming days.