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British Government Tries to Ease Brexit Fears; Referendum Triggers Market Volatility; Wall Street Braces for More Brexit Fallout; European Markets Lower at the Open. Aired 4-5a ET

Aired June 27, 2016 - 04:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[04:00:07] MAX FOSTER, CNN ANCHOR: Thanks for joining us. I'm Max Foster live outside the Houses of Parliament in London. This is CNN's special coverage of the UK's decision to leave the European Union and its truly global implications.

Last week's vote to leave the EU was -- has left British politics in an absolute state of uproar. And it's a mess, frankly. The Finance Minister George Osborne spoke just over an hour ago to try to reassure some of the fears about the UK's future.

(BEGIN VIDEO CLIP)

GEORGE OSBORNE, UK FINANCE MINISTER: It will not be plain sailing in the days ahead, but let me be clear, you should not underestimate our resolve. We were prepared for the unexpected and we are equipped for whatever happens. And we are determined that unlike eight years ago Britain's financial system will help our country deal with any shocks and dampen them, not contribute to those shocks or make them worse.

(END VIDEO CLIP)

FOSTER: Well, George Osborne's message having an impact on stocks. It's hard to tell. You know, could they have gone further if he hadn't spoken or could they have gone higher if he had spoken in a different way. But this is currently what stocks are doing into the first hour of trading. Well, they're pretty much unmoved. I can tell you. We'll bring you that as soon as we have it.

We're going to take a closer look in just a moment but the UK parliament meeting in just a few hours' time for the first time since that referendum result. One big issue coming up, that vacancy that David Cameron will leave when he steps down as prime minister and Conservative Party leader.

Meanwhile, in Labour side, the main opposition party, absolute disarray. Pretty much a bloodbath. Half of the shadow cabinet resigning at the weekend. And one member was sacked in the middle of the night for allegedly plotting a coup. A motion of no confidence in the leader Jeremy Corbyn is expected but he says he won't step down. He's stand in any re-election.

Let's look at how the financial markets are getting on then. CNN Money's Asia-Pacific editor Andrew Stevens in Hong Kong where trading has just closed, Nina Dos Santos, CNN Money Europe editor, on the trading floor in London -- Nina.

NINA DOS SANTOS, CNN MONEY EUROPE EDITOR: Yes. Thanks so much, Max.

Well, it's interesting. You were pointing out before how markets could have opened had George Osborne not spoken. Well, according to the traders on this floor, well, he was very reassuring. It's the first time that we heard in the last three days or so in a really tumultuous weekend when traders arrived at their desks thinking that we had no leadership in charge in the government but also no leadership in opposition either.

They felt particularly reassured by what they heard there from the chancellor saying that while not only does the chancellor have a plan but it's in close contact with the likes of the IMF and the U.S. Treasury Secretary Jack Lew, not to mention other stakeholders across the English channel over in Europe.

And so the markets have recovered some ground. They're still in the red but the FTSE 100 is only down by about 0.5 percent. And it was called to open down about three times that much at one point as we headed into the chancellor's speech. As you can see FTSE down by somewhere between 0.5 percent and 0.75 percent and the Xetra DAX over there in Frankfurt recovering the heavy losses that we saw on Friday.

I should point out still around about $2 trillion were wiped out of global markets on Friday. And over the course of the weekend, we did get a warning from Moody's, the credit ratings agency, EU and the UK, for potential downgrade. That could make borrowing costs more expensive across this country.

And for this kind of reasons we've already started to see some UK- listed companies coming out with some profit warnings and guiding their figures lower. Easyjet was one company that said all the outlook is more uncertain than it was before that. It could impact its financial trading and Foxtons, which is the London based UK real estate agent, that one coming out with its own profit warning as well.

There are some sweet spots here, though. Gold trading higher. That's been lifting some of the gold stocks that are listed on the London markets significantly. The British pound, that one down around about 2 of 1 percent at the moment. It's trading at around about 133. But traders that you speak to across floors like these will tell you well, in the third quarter, if we continue to see more turbulence, we don't see the kind of stimulus that needs to be committed to in the markets here, or the pound could fall to around about 120 in the third quarter.

Where do we go from here, Max? Well, reality is nobody knows. People across trading floors like these are expecting a general election to take place in the first quarter of next year and the new emergency budget to take place in the autumn. One that is likely to be stimulative and not punishing. Remember that going into this particular vote to warn people of the consequences of voting to leave the EU, the pro Remain chancellor George Osborne said that he might have to raise taxes to plug a $43 billion hole in his finances. People across trading floors like these betting even if we didn't

explicitly hear it earlier today from him that that could be off the cards.

[04:05:03] That he may have to stimulate the economy in tandem with of course the stimulus that's coming from the Central Bank as per what we heard from Mark Carney on Friday.

FOSTER: It's going to keep us busy, Nina, isn't it?

Andrew, Friday was an appalling scene, wasn't it, on the markets there? How are they doing today?

ANDREW STEVENS, CNN MONEY ASIA-PACIFIC EDITOR: Well, much better, Max. And I think that there has been an impact from the talking, first of all, from the governor of the Bank of England, Mark Carney, after the Asian markets had closed on Friday. Then we heard from the Japanese today talking about the yen. So the cumulative effect and add to that George Osborne's words an hour ago, things have sort of calmed down quite markedly here in Asia.

Take a look at the numbers. The one that stands out obviously is Japan. The Nikkei finishing up by, what, 2.4 percent. The Nikkei took an absolute belting on Friday down 8 percent. A lot of this was, in fact, due to the fact that the yen was soaring ahead because a lot of players, a lot of investors were putting money into the yen which is considered a safe haven in terms of turmoil. So the yen going up is bad news for companies in Japan, particularly the exporters because their goods are more expensive obviously.

So the stock market took a big hit on Friday. Now we have the Japanese prime minister talking to the Bank of Japan and the public statements are that we're watching the yen very closely. We are prepared to intervene if necessary to keep the strength of the yen becoming too unbearable, and that settled the markets down, as you see the Nikkei up about 2.4 percent as well.

Just on George Osborne, the Hong Kong markets still open when he made his little speech. And it has turned around. It's about flat now, Hong Kong, but it was down about -- between 1 percent and 2 percent.

So having somewhat of an impact there, Max, but with this, the caveat, obviously, is that, you know, there are so many uncertainties still out there about what happens with Europe now. That's the really big one. So this respite we're seeing in Asia at least could really be short lived. It's just unchartered water. We have no clarity. So, really, it's very, very difficult to get any sort of sense of whether this big downturn is over.

FOSTER: Andrew, thank you. Andrew in Hong Kong there. Also Nina on the trading floor here in London.

Now the referendum has unleashed anger and frustration amongst younger voters. That's for sure. Many of them voted to remain in the bloc and they felt betrayed by the older voters who chose the opposite. Actually I want to bring in Joe Twyman now. He works at a polling research firm YouGov.

I understand, though, that the turnout wasn't great amongst the youth vote. So how much do we read into it?

JOE TWYMAN, POLLSTER, YOUGOV: Well, we know that among younger voters turnout was low. But these big divisions within the -- within the voting bloc are very clear. Nearly three-quarters of 18 to 25-year- olds voting to stay over two-thirds of over 65s voting to leave. So that means not just divisions in the country, which we saw with London and Scotland voting differently from other areas, not just divisions in communities but divisions in families. Very problematic.

FOSTER: Socially?

TWYMAN: Socially absolutely. Middle class, more likely to vote stay. Working class, majority want to leave. University educated people, majority of them wanted to stay. People with fewer educational qualifications, majority wanted to leave. And so lots of difference. What we call social cleavages, these ways in which the country is divided on this issue.

FOSTER: And this exacerbated arguably the divide that people feel in society, this whole process, hasn't it?

TWYMAN: Yes. Exactly. What a lot of this is about is if you like winners and losers, people who have benefited, people who have done well from the country's developments over the last 10, 20 years, but then also contrasting that, people in many areas of the country, particularly areas like the industrial northeast, former labor heartlands but also areas of London as well who feel that they have been left behind by the social changes that have taken place. And economically, politically, they feel that the world has moved on in a way they're not comfortable with and that they did not consent to.

FOSTER: But doesn't that suggest that it was a protest vote, then? It wasn't a vote about Europe?

TWYMAN: Well, U.S. skeptics, many of them, have always been more about the skeptic bet than the Europe bet. So yes, for some people it was about Europe. For some people it was a protest. And in a lot of cases what I think was going on some people were thinking, I don't like Europe. I don't like the government, I don't like the political institutions. I'm dissatisfied, distrusting, disapproving of many aspects of the modern world, but actually I think that I can make this decision without taking an economic hit.

FOSTER: Yes.

TWYMAN: It's my opportunity to demonstrate my dissatisfaction.

FOSTER: And now we're getting a sense that we are going to get an economic hit, aren't we? So a suggestion in the media that there's this thing called regrexit, where these people that voted to leave now regret it.

[04:10:03] You haven't had a chance to do much polling since, but what does it suggest?

TWYMAN: Well, it suggests that a very small proportion of people may potentially be regretting their decision.

FOSTER: So regrexit isn't a thing?

TWYMAN: Not yet. But it's still too early to tell. We see a lot of people who voted to leave are actually not going to feel the economic hits. They're not going to be concerned by downturns in the markets. Currency fluctuations aren't going to matter to them. And so it's not a problem that instant. But as time moves on, as the implications are felt more widely over the following weeks, perhaps even years, then we may see a change, but it's too early to say. And there's a government petition saying millions of people want a second referendum. But again, that tends to --

(CROSSTALK)

FOSTER: OK. Joe, thank you very much. Appreciate that. Very important to analyze what happened here so the new government can form based on something that people agree on.

And here in Britain, we are not only waiting to see the impact of Brexit, not even clear who the next prime minister is. That's the point. The vote has brought an abrupt end to the premiership of David Cameron who campaigned hard for his country to remain in the EU. He resigned on Friday and will stay on until his successor is in place in a few months' time.

And around half an hour from now he is due to meet his Cabinet ministers. Let's take you down to Downing Street just around the corner. CNN's Diana Magnay is there.

I mean, what is his role now? What do you think he's going to try to achieve now that we know he's going?

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Well, he has to try and put in place, Max, a framework for the relationship that Britain will have with the European Union before Article 50 is invoked once the new prime minister is in place. He has out to put in place a Brexit cabinet essentially who can try and structure that deal or at least a semblance of a deal. And we've had cabinet ministers trickling in this morning because the cabinet meeting -- a Brexit cabinet meeting is due to start in about 20 minutes' time. So they're coming in as they go through.

George Osborne this morning, his comments were of course extremely important for everyone to hear. There were lots of questions about where he was over the weekend. We didn't see him since the results of the referendum. He was essentially missing in action. And today he made clear that he'd been spending the last 72 hours speaking to finance ministers across Europe, the head of the IMF, CEOs, to make sure that the financial system was stable, that people were confident that the British economy was resilient and could do what it takes.

Let's just have a listen to what he said this morning. (BEGIN VIDEO CLIP)

OSBORNE: Of course, the economy is going to adjust, and there will be an impact on the public finances. That's what I said before the referendum. I don't resolve from anything I said before the referendum. And I said that there would have to be action actually as it happens in the autumn to address that. I think it's perfectly sensible to wait until we have a new prime minister before we address that.

(END VIDEO CLIP)

MAGNAY: Business of government we've just heard from Michael Fallon as he goes into that cabinet meeting. Not -- none of the ministers really prepared to make many utterances at this stage, but as you can hear from the fellow journalists, all asking these ministers as they go in what the plan is for Brexit and clearly George Osborne made clear this morning he is not going to leave. There are question marks about whether he would be resigning with the result going away it did. And he clearly wants to remain a part of a future government in this country as they try and work out what shape that government will take, Max.

FOSTER: Some suggestion that Article 50, as we've come to know it over the last few days, doesn't really need to be a thing. It doesn't have to be invoked. You can effectively just drop those European laws and rules in this country and carry on as if they weren't there. Is that being considered at Downing Street, do you think?

MAGNAY: I think that would be a very difficult thing to do. All of the UK law since 1970s has been based on EU regulation. If you essentially just repeal the Economic Community Act of 1973, then there is no legal foundation to anything that the -- that British law has. So I don't think that that's necessarily going to be an option. I think it will be more a question of the time frame by which they decide to invoke Article 50 rather than a decision not to invoke it at all.

But as Boris Johnson said in an editorial today and as George Osborne made clear in his speech this morning, Britain feels no rush to invoke Article 50 until it feels confident that it has a basis of an agreement with the EU about how to proceed. That's clearly not the way the EU wants it, but the ball at this stage lies in Britain's court.

[04:15:08] FOSTER: OK. Diana, a lot to report on today. Thank you very much indeed for bringing us that. We'll stay on Downing Street throughout the day to bring you the very latest.

After the break, a live report from New York as well, though, where stocks are poised for some possible gains after the Dow's plunge of more than 600 points on Friday because of fears around Brexit.

(COMMERCIAL BREAK)

FOSTER: A period of instability. You heard it from one Londoner earlier about some of the concerns his country is facing right now.

Hello, and welcome back to CNN's continuing coverage of the UK's vote to leave the European Union and the global fallout from that decision.

[04:20:02] I'm outside the Houses of Parliament and MPs will be returning here for the first time since that vote and all the political chaos over the weekend.

In the past couple of hours, the UK's Finance minister has given his first statement since the Brexit vote. George Osborne says his country is equipped to deal with the fallout but warned the economy and public finances will be hurt.

Later today in Berlin, three top EU leaders will meet to discuss Britain's position in Europe. They are Germany's Angela Merkel, France's Francois Hollande and Italy's Mateo Renzi. And while British leaders scramble to address the crisis, the UK's opposition party has announced a new shadow cabinet lineup after half of Labour's previous cabinet resigned, calling for its leader to stand down. He's not doing so.

I'm joined by Douglas Carswell. He's a member of parliament with the UK Independence Party which campaigned in favor of leaving the European Union.

And what an extraordinary moment in British political history. How would you describe the atmosphere here today?

DOUGLAS CARSWELL, MEMBER OF PARLIAMENT, INDEPENDENCE PARTY: Well, I think some MPs are angry and in denial because most of them have been in favor of this failed project. But, you know, a lot of them are being pragmatic and coming around to it.

Look, we need to recognize, and I've been campaigning to leave the European Union for 25 years. We need to recognize that 48 percent of the population are concerned and didn't vote to leave. And we need a new consensus that reaches out and brings as many of them with us as possible. We can do this but we're going to have to have goodwill on both sides.

FOSTER: There's this element of divisiveness now, though, in the country, isn't there? People are really frustrated. People talking about broken promises, people now concerned about what's the impact on the economy.

CARSWELL: Certainly --

FOSTER: How do you bring people together?

CARSWELL: Certainly a lot of broadcasters who weren't expecting this. A little stunned by it. but believe me, out there, the majority of the population think this is a good thing and it's a great sense of relief that, wow, thank goodness, we're going to leave. But we also need to recognize that good, decent honest people that I listen to during the campaign voted to remain. We need to recognize some of their legitimate concerns. And we need to address those concerns and we need a new consensus.

But I spent 20 years arguing about the EU. I don't want to spend the next 20 years bickering about this. Let's get a deal that works for everyone.

FOSTER: Can I just ask you? There's a lot of confusion today about how the process works, how Britain does leave the European Union. We're told it was all about Article 50. We're told by Nicholas Sturgeon in Scotland that she's going to block Article 50. We're hearing from John Redwood, I spoke to him in the last hour saying it's actually irrelevant now.

How do we technically move forward with this process?

CARSWELL: It's going to be a three-stage process. And it's going to work like this. Number one, we're going to get the people, the chief architects of the Vote Leave campaign, they need to be installed in White Hall so that they, not the officials and the mandarins who made such a mess of the Euro policy for the past two decades are overseeing it.

Once that's done, step two is we will then enter an informal process of negotiation to work out the outlines of the deal. Step three, then and only then will we trigger Article 50. Now we could, we could press the nuclear button and today pass an act of parliament declaring ourselves independent. But we want to do this by consent, with goodwill. We want to be good friends with our European neighbors. Let's do this sensibly and properly.

FOSTER: Four years you'd say maximum?

CARSWELL: We've got a two to four-year period of which this is going to happen.

FOSTER: Just ask you a couple of promises on the campaign trail because our viewers have been talking about it. This 350-million pound promise, that's going to come back from Europe go into the NHS, but that 350 pounds is being questioned now because it doesn't account for the money that was being brought back into the UK and being paid back. Was that a wrong promise?

CARSWELL: Not at all. Our greatest contribution is $20 billion. And that contribution is 10 billion. Of that 10 billion we expect that about half of that, about five million pounds, about 100 million pounds a week will go on extra funding for the NHS.

FOSTER: Immigration, are the numbers going to go down?

CARSWELL: Yes, they will. We'll have an Australian point based system, but Britain is going to be open for business. It is going to be a good place to do business. We are not closing the borders. We are controlling who comes here. And that doesn't mean not letting people in. It actually means making sure we have people with the skills the businesses need. If you're on a business immigration, you will continue to be able to hire the best and the brightest from around the world. FOSTER: Douglas Carswell, a key figure in the Leave campaign, thank

you very much indeed for joining us. A very busy day here in the building behind.

We're going to take a look at how all this political uncertainty, though, is hitting the global markets because U.S. futures are marginally higher this hour, we can tell you, on Wall Street. Let's go to CNN Money chief business correspondent Christine Romans -- Christine.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Hi, there, Max. You know, and that tells you something important here, I think, as we start a new week is there is not a resumption of the big selling we saw Friday. The falling off a cliff because of the chaos and uncertainty from Brexit. That was Friday. And now at least in the very early going here, U.S. stock futures showing that that resumption of selling is not going to happen here, at least in the early going.

Dow futures now down just about 54 points. They had been a little bit higher. S&P 500 futures down just a tiny bit here. A third of 1 percent. So what now? We'll be watching for the banking stocks, the financial stocks this morning to see how they do.

[04:25:04] They bore the brunt of it on Friday. A lot of questioning about what happens to the London headquarters of U.S. and big multinational banks. We'll be waiting to hear from those CEOs and the analysts as they still try to figure out what happens here next. But there have been six months now of contingency planning among the big banks. There are rumors over the weekend of job cuts in London or moving jobs to different parts of the -- of Europe. All of that still really up in the air and only rumors.

So watching the banking sector. Watching profits for the big multinational companies. Look, the pound has plunged here quite frankly. The dollar is strong. That strong dollar is going to hurt the profits of multinationals and hurt their quarterly profits. We'll be looking to see just how those stocks do.

Also what would -- what is the going estimates now of a potential recession or just how slow could the British economy get in the next couple of quarters and what would that mean for European companies and what would that mean for U.S. companies and revenue and S&P 500 companies that are tied to British business and European business? So those are all still the questions that are going on here.

Max, what I can tell you, markets hate uncertainty as you know. It is the first thing you learn when you're covering a market or trading in a market. Markets and business leaders hate uncertainty. Fear and uncertainty is the enemy of investment. It's the enemy of consumption, of spending, of making long-term plans. And we have about two years of uncertainty here looking forward as this divorce between the UK and the EU moves forward. Really without a road map. So that's what we're facing here.

One last thing I'll point out, Max, about the S&P 500, it has now turned just slightly lower for the year. Two ways to look at that. Even with this earthquake from the UK, this important ally of the United States, even with this earthquake, you've got the S&P 500 just a little lower for the year. That shows some resilience, I think. The question is, does the strength this summer in the U.S. economy overrule all this uncertainty from Europe and the UK? We just don't know. Markets hate uncertainty. We have a surplus of uncertainty right now, Max.

FOSTER: Certainly, Christine. And we're not going to get much clarity really on the big questions today. But we'll certainly try to get to the bottom of what we can.

Still ahead, from United Kingdom to a divided kingdom. Coming up, more from one of the key fronts in the Brexit battle. And that is Scotland. Big questions being answered there.

(COMMERCIAL BREAK)

[04:31:57] FOSTER: You're watching CNN's special coverage of the international fallout from the UK's decision to leave the European Union. I'm Max Foster live for you outside the Houses of Parliament for the very latest developments on this story.

European markets falling yet again with the FTSE in London losing the most. Investors are anxious after last week's Brexit vote despite an attempt by Britain's Finance minister to reassure the markets. They're not down too bad but on an ordinary day that would be bad.

In a televised address, George Osborne said the UK and its finances were equipped to deal with the likely turbulence ahead.

Britain's opposition leader, meanwhile, Jeremy Corbyn, is battling a crisis in his Labour Party. Some people saying the Labour Party's very essence is at risk today. He has just appointed a series of new members to a shadow cabinet after nearly a dozen of his team resigned. Critics within the party have said Corbyn failed to provide leadership in the campaign to remain in the EU.

And Scotland's first minister says her country will do whatever it takes to stay in the EU. Nicola Sturgeon says she wants to make sure that Scotland's democratic will is respected after a majority of Scots voted remain in Thursday's referendum. Sturgeon also says her priority is to protect the people of Scotland through what will inevitably be a difficult time.

(BEGIN VIDEO CLIP)

NICOLA STURGEON, SCOTTISH FIRST MINISTER: My challenge but also my responsibility as first minister is to seek to negotiate, to protect Scotland's interest. What's going to happen with the UK is that they are going to be deeply damaging and painful consequences of the process of trying to extricate the UK from the EU. I want to try and protect Scotland from that.

(END VIDEO CLIP)

FOSTER: David Torrance is a political commentator and author, joins us from Edinburgh, Scotland. Would you mind interpreting what she was saying there for the wider audience?

DAVID TORRANCE, POLITICAL COMMENTATOR: Well, basically, she's presenting a bit of a contrast between her sort of cool authority and leadership terms and the stability of the situation in Scotland with what could reasonably be depicted as chaos and a bit of a political vacuum in Westminster. And in essence her plan is to try and find a way of keeping Scotland, which of course is part of the UK and is still part of the UK in the EU or at least in the single market while the rest of the UK starts to negotiate its extraction from the European Union.

FOSTER: She has a nuclear option, doesn't she? She outlined that or suggested it yesterday. She's suggesting that the law dictates that the Scottish parliament could block a Brexit. Lawyers are sort of discussing that as we speak. Much more qualified people than us. But Douglas Carswell of UKIP just telling me in the last hour there's no way that Scotland has any say in this. It will all be decided in parliament here. What's your understanding?

TORRANCE: My understanding is that's simply not a runner. And indeed constitutional experts I spoke to yesterday confirmed that. They're slightly mystified by what the first minister said.

[04:35:02] I mean, she's mentioned pursuing a range of options in terms of Scotland moving forward but that didn't strike anyone I spoke to as a credible one. For the simple reason that matters constitutional and that includes the UK's membership of the European Union are explicitly reserved to Westminster. There's a clear division of powers between the divulge Scottish parliament and the UK parliament, the UK government in London. And that simply isn't a responsibility of the parliament in Edinburgh has.

FOSTER: So what is the next step for Nicola Sturgeon? Many people say is that she is the one leader that's really emerged as the strongest in this whole debate. She's also getting what she wants or she's moving towards it. What is her next move whilst this place goes into meltdown?

TORRANCE: She has spotted a very clear political opportunity to revive the argument for independence which, of course, was put to a referendum less than two years ago and was lost. So her plan -- she'll be addressing parliament tomorrow. But this week and next she'll be trying to engage directly with the European Union leaders presumably in Brussels. She's also convening a summit of all the 27 member states consul generals based in Edinburgh.

Host to engage directly with them. I assume a bit of a charm offensive to make the case for some sort of compromise, some sort of flexibility toward Scotland. But, of course, it won't be easy. There is no direct precedent for this. People have spoken of Scotland doing a reverse Greenland. Greenland is an autonomous part of Denmark. It opted out of the European Union in the '80s. But it's not clear cut.

And of course there is the prospect as there was two years ago of a Spanish veto. The Spanish government embroiled in their own constitutional debate with Catalonia. Doesn't want to establish a precedent.

FOSTER: OK. Thank you very much indeed for that. That's the view from Scotland.

Robin Oakley is here. And that's really pertinent, isn't it? We had this with the Scottish referendum that there are particular governments in Europe who block Scottish membership in their own right of the European Union. This is no way they want a Catalonia or another sort of upsurge of nationalism in a region.

ROBIN OAKLEY, CNN POLITICAL CONTRIBUTOR: Every one of the 27 countries has the right of veto over the admission of a new country. And as you say, Spain and perhaps one or two other countries not keen to encourage regional divergence in their own country.

FOSTER: How does she capitalize on this undoubted wave in her favor then?

OAKLEY: Well, she capitalizes in the -- to the extent of probably being able to win a referendum on independence for Scotland. Last time around, it was, what, 55-45. But, you know, the figures, I think, will have moved considerably in the favor of those who want to see --

(CROSSTALK)

FOSTER: And a very different atmosphere because Scots at the time when I was up there, the people that voted to stay in the UK, they were going for security. They were looking for that security. And the other side hadn't really convinced them that the risk was worth taking. But there's so much risk around at the moment. Actually leaving to some people there now feels like the safe option.

OAKLEY: There's a degree of confidence in Scotland that we perhaps didn't see at the time of the last referendum. But at the same time there's the question of the oil revenues which would be a big factor in all of this. And world oil prices having dipped. You know, it's not such a good economic background for Scotland to go independent, but people might not see that as the major factor any longer.

FOSTER: Let's look at the immediate crisis for the opposition Labour Party. Jeremy Corbyn staying in his job. He's lost most of his cabinet, though. He's filled the positions with people of his own political persuasion largely on the left. How is he going to get through this?

OAKLEY: It's an absolutely bizarre spectacle. I can't recall a time when so many senior figures in one party have demonstrated their lack of faith in their own leader. And, of course, part of it is the feeling that he didn't do enough for the Remain campaign, to which the Labour Party was committed. Jeremy Corbyn is a longtime Euro skeptic, and it showed during the campaign. He really didn't put much effort into it or conviction.

But a lot of Labour MPs were also saying, look, is this guy really up to the job? He comes from a narrow section of the Labour Party. He's very sincere in his views and everybody respects him for that. But as a party leader, you have to be able to go out and persuade people who are not of your particular set of views to back your party. He just doesn't show any of those characteristics of being a leader who can engage with the country at large and bring back some of those Labour voters who disappeared. Particularly the ones who disappeared to UKIP because it was in the Labour strongholds in the north and in the midlands that the Leave vote racked up their biggest results in the referendum.

FOSTER: OK. Robin, thank you very much indeed.

Many more strands to look at. You're watching CNN's special coverage of the UK's decision to leave the EU.

[04:40:03] Still to come, more analysis of what this means for the global financial markets. They're all watching.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Outrageous. I think it's terrible. I think worst day in British history for about 50 years. Horrendous. Absolutely horrendous. I think Cameron should be taking personal responsibility for resolving a referendum that he himself called basically.

(END VIDEO CLIP)

FOSTER: Just one of so many opinions being expressed across the UK right now.

Hello, and welcome back to CNN's rolling coverage of the UK's Brexit vote and how the decision to leave the European Union is affecting the rest of the world.

I'm Max Foster in London.

Now the UK parliament here is convening today for the first time since the referendum results. One big issue coming up, the vacancy that David Cameron has left or will leave when he steps down as prime minister and Conservative Party leader later this year.

[04:45:07] In the past couple of hours, UK Finance Minister George Osborne gave a televised address in which he tried to calm any fears about the British economy but markets are down this morning as the impact of Brexit sinks in.

The UK is divided politically, geographically, generationally, socially following the Brexit vote. So how can it recover?

Richard Quest is here with me. And what George Osborne was doing was tried to create some sort of continuity and stability to the system.

RICHARD QUEST, CNN MONEY EDITOR-AT-LARGE: Yes, because clearly it is uncertainty. It is the weight of uncertainty that is now causing most of the difficulties. There is a worry about how they move forward. Business could put spending on hold. Consumers may stop buying big products. Nobody wants to take a risk until they know what the economic picture actually is going to look like.

And what George Osborne did say is that he stood back for none of -- he did not stand back from any of the comments that he actually made during the campaign. So, yes, he does believe there will be a recession and he does believe that there will be a major re-adjustment in the British economy.

FOSTER: He also said they planned for that so you shouldn't worry too much. We've got a plan in place. But did they?

QUEST: Of course they planned.

FOSTER: Well, they planned an emergency budget.

QUEST: Well, forget -- that was one aspect. But they planned about how to put the fire out. They planned how to deal with the fact that the house is burning. Yes, they certainly did. The Bank of England did. Everybody had a plan in place for liquidity to make sure that the markets don't completely fall over. Yes, they did have a plan for that.

FOSTER: Looking ahead, how does Britain -- British business readjust its mindset to deal with this because Brussels has always been there, hasn't it?

QUEST: Yes, and that's the only government that has to rethink things but business has to rethink things. Every business. I'll give you an example. Easyjet and, say, for example, British Airways owner of IAG, they have to now, particularly Easyjet, where all those European bases in France, in Germany, in Spain, in Portugal, all those bases that they have on mainland Europe are running under the certificate of the British Easyjet.

Now that certificate will no longer be valid for all those other ones after Brexit takes effect. So every company is at the moment analyzing, including our own, analyzing what is the effect once Brexit finally takes place in, say, two or three years time. Well, what is my Brexit downfall if you like, as a result of that.

FOSTER: OK. Richard, thank you very much indeed.

A lot to digest. We'll be doing it for you. Markets find some stability then following Friday's dramatic losses. When we return a closer look at what we can expect from investors in the hours ahead today because they're pretty unsettled.

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[04:52:11] FOSTER: Global markets beginning to stabilize thankfully following Friday's turbulent reaction to the Brexit vote in the UK. Wall Street futures are lower but it's nothing like the 600-point loss that we saw in the Dow on Friday.

Here in London, the FTSE 100 continues to lose ground despite the Finance minister's words of reassurance before the start of trade. Markets in Paris down 1 percent.

Let's go to Nina. She's on the trading floor -- Nina. OK. No Nina. But as you can see, the markets are down pretty substantially. But not as bad as it could have been, according to some.

For more on what we can expect in the hours ahead, we're going to speak to Francesco Guerrera, associate editor-in-chief, financial correspondent for Politico.

A very busy weekend for everyone to try to digest to make sense of this. For your international audience, how are you headlining this?

FRANCESCO GUERRERA, CHIEF FINANCIAL CORRESPONDENT, POLITICO: Well, we're trying to explain what is essentially three days of confusion. Nobody knows how the UK is going to leave, when the UK is going to leave. There's a lot of machination in Brussels and in national capitals to try and give the UK more time.

FOSTER: Yes.

GUERRERA: To try and give more time to --

(CROSSTALK)

FOSTER: Find a leader.

GUERRERA: Heal and -- well, find a leader and work out a deal.

FOSTER: Yes.

GUERRERA: That enables the UK to actually do it properly.

FOSTER: But if George Osborne was negotiating a deal over the next three months and a new prime minister comes in, how do the Europeans know that they're dealing with the right deal?

GUERRERA: So I don't -- I think the Europeans will do their best to wait for the next prime minister.

FOSTER: Yes.

GUERRERA: I don't think they're going to rush into triggering the clock ticking for the UK to leave because then you only have two years and you can't negotiate with someone who is essentially a lame duck as Osborne would be. So they have to wait. The question will be whether there's a hawkish part of the European Union that wants to go faster.

FOSTER: Yes. And what are they saying to each other? Because they've got to come up with a common message, haven't they, which is difficult at the best of times in Europe, absolutely vital right now if they're going to meet David Cameron tomorrow?

GUERRERA: So what we're seeing now is an attempt by the core, what they will say, the core founders of the EU. So France, Germany, Italy, to try and come up with a solution that they can then sell to the rest of the European Union. First thing is happening today. Tomorrow we'll have another meeting. Angela Merkel is very much in the driving seat. The Italians are helping out.

FOSTER: Yes.

GUERRERA: The French are helping out. The issue is there's now 27 members of the EU.

FOSTER: Yes.

GUERRERA: It's possible that they won't be able to sell it to all the rest of EU.

FOSTER: Well, France is absolutely furious. Many parts of the French political establishment they want to punish the UK. They don't want to -- let it become an example. Angela Merkel being more conciliatory. You expertise is Italy as well. So what are they going into this from?

GUERRERA: So when I talk to the Italians, they are very much in the camp of giving the UK more time. It is sure that they want to give a precedent. Italy has a very important referendum in October which could also trigger some European problems. So they want to make insure that this is done properly. And they want to give the UK more time.

[04:55:01] So the tension now is between those who want to make sure that the UK has about three months to find a new leader and a new prime minister and those who say, you know, they want out, let them out.

FOSTER: But is the argument being that the referendum was actually the trigger for this Article 50 process?

GUERRERA: That's the argument but -- and the argument is interesting. We heard it before the referendum. And now you're hearing less and less in Brussels.

FOSTER: Trying to make sense of it. Thank you very much indeed.

I'm Max Foster in London. Thanks for joining us. We are -- for our viewers in the U.S., "EARLY START" is going to come up for you next. But for everyone else, Nina Dos Santos will continue our coverage of the UK's decision to leave the EU.

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