Till yesterday financial experts seemed convinced that the British public would vote to remain in the European Union but in a result that has caused shock and awe all across the world, Britain voted to leave the EU by a majority of 52% and following the results, the financial markets went into tailspin. British Prime Minister David Cameron resigned following the results which further intensified the panic in the markets. The British pound reached levels last seen in 1985 and stock markets in UK, Europe and Asia took big hits as traders tried to control the damage.
According to a report on Bloomberg, the reactions in the market are reminiscent of what went on globally back in 2008, "The pound fell to as low as $1.3229, before trading down 7 percent at $1.3839 at 11:15 a.m. in London and still on course for its worst day on record -- far exceeding its previous record decline in 1992. That's when it fell 4.1 percent on Black Wednesday, the day the currency was forced out of Europe's exchange-rate mechanism. Oil tumbled 4.8 percent, gold jumped 5 percent and the FTSE 100 Index fell 4.5 percent. HSBC plunged 4.2 percent. The selloff was compounded by the fact that markets had rallied over the past week on optimism that the U.K. would vote to stay. Finance officials have are already started firefighting. The Bank of England said it was "monitoring developments closely" and will take all necessary steps to ensure stability. Governor Mark Carney may end up having to cut interest rates or revive quantitative easing."
John Cryan, the CEO of Deutsche Bank AG released a statement in which he said, "This is not such a good day for Europe. We cannot fully foresee the consequences, but there's no doubt that they will be negative on all sides." The Bloomberg report went on to add, "JPMorgan CEO Jamie Dimon, who has 16,000 employees in London and other British cities, said this month a vote to leave could mean a quarter of those jobs might be cut. Morgan Stanley and HSBC have made similar noises. Global companies said they would reassess their U.K. investments in the wake of the vote."
