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British P.M. Heads To Brussels To Meet With E.U. Leaders; Resignations In Corbyn's Labour Party Shadow Cabinet Up To 19; S&P Downgrades U.K.'s Credit Rating; Angela Merkel Says She Does Not Want To Enter Into Talks Until U.K. Formally Starts Exit Process; Scotland Still Trying To Find A Way To Stay In European Union. Aired 3-4a ET

Aired June 28, 2016 - 03:00   ET

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

(COMMERCIAL BREAK)

[03:00:00] ROSEMARY CHURCH, CNN NEWSROOM SHOW HOST: Hello and welcome to our viewers here in the United States and all around the world. I'm Rosemary Church at CNN world headquarters in Atlanta, where it is 3 o'clock in the morning.

MAX FOSTER, CNN NEWSROOM SHOW HOST: And I'm Max Foster outside the British Parliament in London where it is 8 o'clock in the morning.

Now, the British Prime Minister David Cameron is heading to Brussels to meet with E.U. leaders for the first time since the Brexit vote.

He says he won't be handling the actual process of leaving. That task will go to successor who is now expected to be in place by September.

Back in London here, the opposition Labour Party continues to unravel under the leader Jeremy Corbyn. Resignations in Corbyn's shadow cabinet are up to 19 now.

The markets haven't rebounded as hoped either. Ratings agency Standard & Poor's downgraded the U.K.'s credit regarding two notches on Monday.

The market volatility as well, most of Asian markets are closed and they spent much of the trading. They are down following the declines in the Europe and in the U.S. On Wall Street the Dow slumped 261 points to its lowest level in more than three months.

The Dow has plunged nearly 900 points in just two days. The European markets opened just a few moments ago. We're going to bring you those numbers as they settle down, they come in to us. We're obviously watching that closely, indeed.

Let us just confirm those numbers before we bring them to you. Because I think we are literally one minute in. And I think there are bigger some more from yesterday, but we'll confirm that. Nina, what are you hearing there in terms of this opening numbers?

NINA DOS SANTOS, CNN CORRESPPONDENT: Yes, thanks very much, Max. Well, what we're seeing is the European market is opening up to the tune of one half of one percent, especially for the FTSE 100 which has so much way to go to try to recover the losses that we saw over the last few days.

Remember the $3 trillion is now being wiped out of the global market in just two sessions Friday after that shock decision from the U.K. to vote in favor of the Brexit, and also Monday wasn't much better. Because even though the markets looked as they were swayed slightly by the Chancellor George Osborne assurance that the U.K. economy is strong and that the government has a game plan for the scenario we're seeing, well, they still sank like a stone.

So, some of the heaviest losses were incurred not so much on the FTSE 100, Max, but on what's called the FTSE 250, this is the index listed here in London old shares in small to medium size companies.

And the real fear here is that they're not diversified enough in terms of where they get their sales from outside of the U.K. to try and buffer a potential recession that's taking place. According to the economist here at Panmure Gordon, by the end of this year.

Now there is a bit of a bright note here. The pound falling by around about 11 percent over the last two sessions. It has managed to recover. And I should also point out that the noted economist, Rabiny (ph), famous for making a number of predictions about recessions.

One of them transpired to be through famously back in 2008, when we saw the credit crunch, he said don't worry, the world is not going to face a recession because of this. Maybe the U.K. will, but it may be mitigated in terms of other economies in the fallout that you could see.

I should point out today, though, this is a sign of how turbulent it is. Both the Federal Reserve chair, Janet Yellen and also the Bank of England Governor Mark Carney have decided to canceled a planned speech that was set take place at the ECB's big getaway, normally has an upsize in Portugal this time this year. That they both decided to cancel because the markets are listening on tinder hooks to everything that they say these days.

FOSTER: OK, Nina. Thank you very much indeed. We're going to speak Defterios, he's in Abu Dhabi as well. He's looking at the global reaction. And we're really getting a sense now, aren't we, John, about how this is affecting the rest of the world and how Britain's being affected by the rest of the world.

Because it seems as though -- well, we heard from China earlier saying they're not going to consider more investments in this the U.K. until they know what's going on. I'm sure it's the same in relation to your region as well.

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: It is, Max. In fact, the markets have stabilized because of the stimulus measures coming from South Korea, some of the worst we're hearing from Japan and China.

But we saw even over the weekend that Saudi Arabia and Central Bank saying that it was diversifying out of both pound and euro assets going forward to balance its portfolio.

I think the story can be told among certainty through two figures alone, and that is the fall of the British pound which again has stabilized in early trading. But we had the same situation yesterday and the price of gold which has surged over the last six months.

But really a wakeup call for emerging market investors today, Max, if you look is the downgrade from triple-a to double-a by S&P knowing that the uncertainty y lies with government right now.

Let's be clear. There is no prime minister in place and the opposition party is imploding.

[03:05:04] Now to put this into perspective, the U.K. has always been a rock for emerging market investors, no less the Middle East investors because of transparency, because of reliability. The haunt as a property investment, an investment into bonds as well.

That has shaken badly, really badly, Max, over the last three or four days of trading and having the weekend to think about it.

So, let's take a look at the price of gold, again, it has stabilized here around 1330 an ounce. It's come off of its reason highs, but if you look back over the last six months, it has surged 25 percent or better than $300 an ounce. So, it's down a half percent now at $1316 an ounce and that's because of the stimulus measures that we've talked about.

Now, people have to look in for safe havens, there's one of course, if you look at the mining stocks, Newmont Mining in the United States has surge a 100 percent in the last six months of trading because of that.

But on the opposite end of the spectrum we had eight stocks suspended in U.K. trading for those or property stocks because of what I've been talking about. Will foreign investors still want to come to the U.K. going forward?

And there's been 50 new developments in central London alone. About 10 percent of those are owned by Middle East investors by themselves. Another huge question we're going forward, we've seen the rising tide, Max, of nationalism in the country.

Will Middle East investors be welcome going forward in the future? Here's a question mark, and in fact, in 2015, 20 percent, get this, 20 percent of the buy to let properties in central London were purchased by Middle Eastern investors alone.

And a final point here, I know there was a big E.U. summit that Nina was talking about. Let's go back to the troika meeting with Angela Merkel, Francois Hollande, and Matteo Renzi that took place yesterday.

And we saw Francois Hollande say, quote, unquote, "Europe is Europe. Europe is strong." Now if you look at that picture, you could say yes, Germany is strong but France is not strong right now and Italy is in a financial crisis nor having to funnel money into the banking system. We have a bear market in Spanish and Italian stocks, 17 percent drops

in the last month alone. So, big question marks, how strong is the core of Europe and that's what investors are asking today as they go for that E.U. summit. Max.

FOSTER: Yes. We're going to speak to Nic in a moment about that. I just want to bring up those European numbers, John, because we, you know, they were settling as we were trying to come to them earlier.

And we want to get a sense of what they're looking like now. And actually, they looked -- can I -- just a quick word, John. Because this is pretty extra ordinary, isn't it? We're seven minutes into the opening of trade and the European markets are flying up more than 2 percent in London and the rest of Europe. Can you put that in context for us?

DEFTERIOS: Absolutely, Max. We've had a complete washing out over the last three days. And we had this spiral. Yesterday, we had Asian markets were down, Europe opened lower and the United States went even lower than that and there was a perpetual cycle.

Then we had the downgrade. Then we've had a massive selloff since Friday and the vote taking place. The pound corrected at 12 percent, it has stabilized as well.

But I think the markets are rallying this morning because what I was talking about in the top of my comments there. We're hearing stimulus packages are coming out of Asia, one already announce from South Korea, suggestions that the Japanese budget will expand as well.

And we could see interest rate action coming forward from the European Central Bank and more stimulus coming as well.

Another point to raise here. Because of the crisis in the U.K. right now, Max, we're forgoing any interest rate rises. At least that's the forecast from the U.S. Federal Reserve. So, we were looking at higher interest rates, of course. But at this stage because of what's happened in the U.K. and Europe, that will be held off for now.

FOSTER: OK. Fascinating. John, look at those figures. Two percent up today. Who would have thought it? Nic Robinson is over in Brussels he's looking at the summit today.

David Cameron is going to turn up there, try to explain what happened here in the U.K. to European leaders who basically want a swift decision on Britain leaving the European Union and David Cameron's not going to be able to give them that, is he?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: He isn't. And we were talking earlier, Max, about the difficulty of David Cameron walking into the European Union to face all those leaders after causing so much market upset, so much turmoil, so much political concern.

All of that goes on there as President Francois Hollande was talking about yesterday as well. As long as Britain is sort of dithering on deciding precisely when and how it's going to exit the European Union, then the political -- that there is a potential for political instability in Europe to ensue from that financial instability.

But perhaps one of the most interesting meetings for David Cameron today will be when he goes in to meet with the president of the European -- with the European Commission, John-Claude Juncker.

[03:10:04] Because this is a man that only a year or so ago, David Cameron was quite vociferously opposing to take up that leadership position.

That's a motorcycle convoy outright as the police motorcycles and their sirens. Of course we had all these 27 plus David Cameron, European leaders arriving here today. I think we're going to hear a lot of the police motorcycles whistling back and forth with here outside the European Parliament building.

But the point being that David Cameron's time here in Brussels today is not going to be a particularly easy. Potentially, you know, embarrassing when he goes in to meet the European Commission Jean- Claude Juncker whose presidency he so outspokenly didn't support just over a year ago.

But what we expect him to do is to explain to the European leaders why the vote in Britain went the way it did and that will potentially lay some of the groundwork for the next prime minister to come along and shape what the new relationship with Europe.

But he will be pointing out some of the issues and he thinks a pertinent to other European leaders and that will certainly resonate with some of them, issues that they face with their electorate in their countries, Max.

FOSTER: OK. Nic, thank you with you throughout the day of course. We get updates from pretty awkward meeting, it must be said, between David Cameron and the other European leaders.

We're also getting to Serbian (ph) reports how the U.K. suggesting that racial abuse has been on the rise to the votes to leave the E.U. last week.

Police are investigating several incidents including some in the Polish community.

Our Diana Magnay has more.

DIANA MAGNAY, CNN CORRESPONDENT: The time the Polish community head down to the boroughs of how much they were kneeling in the west. There's a long history of Polish integration here. The Polish center the heart of a well-integrated community. Which is why an act of vandalism here at the weekend has come as such a shock.

You can still see the traces of the yellow paint in which this slogan was dawdled across the Polish community center. And they stretch all the way down across this glass beside right up to the Polish eagle at the end. I'm not going to tell you exactly what was said, but you can clean it was go home but in slightly less savory language.

The graffiti is gone now. The hate replaced with flowers and messages of support. For Joanna Mudzinska who runs the center she says it isn't a one-off.

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JOANNA MUDZINSKA, POLISH SOCIAL AND CULTURAL ASSOCIATION: We've heard reports and seen pictures of notes being pushed through the people's doors, you know, describing them as vermin and scum and verbal abuse.

(END VIDEO CLIP)

MAGNAY: We meet Marianna Koli who moved here from Finland when h she was 18. On Saturday, she experienced what she felt was the first racist incident of her 16 years in the U.K.

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MARIANNA KOLI, ECONOMIST: I was walking in Maliki high street, I was talking to a friend of mine speaking in English. And a top from just behind me a few feet away shouted "I like your accent" in a very loud voice. And I did feel it was a bit threatening. It wasn't a sort of a clear, a very clear it wasn't intended as a compliment.

MAGNAY: So, it was almost sarcastic like "I like your accent."

KOLI: That's how it sounded like to me. He was saying "I see you. I have no suspicion that you are foreign and I would like to tell you that you are foreign.

(END VIDEO CLIP)

MAGNAY: London metropolitan police say they've seen a 57 percent increase in reporting to their stop hate crime web site. A Facebook group calling itself worrying signs have logged a thousand incidents since it was set up on Saturday.

"Go home," with their response, "I am home," one of the least offensive of the postings here. One Polish we followed up with, e- mailing to say she's had full on excrement through the letter box and was planning on leaving the U.K. if it didn't stop.

British Prime Minister David Cameron raised the issue in Parliament.

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DAVID CAMERON, BRITISH PRIME MINISTER: I spoke to the Polish Prime Minister this afternoon to say how concerned I was about the terror attacks in placing place and to reassure her that we are doing everything we could to protect Polish citizens in our country.

(END VIDEO CLIP) MAGNAY: But the Prime Minister promises may ring hollow to European

ears right now. More of the messages of support at a grassroots level that we reassure Britain's European communities that they are still welcome in a country that they call home.

Diana Magnay, CNN, London.

FOSTER: CNN political contributor Robin Oakley joins me now here in London. This is one of the issues that the country's having to digest while there is this political vacuum. The problem is you haven't got leaders coming out and speaking to the nation.

Because we haven't done it really now. That no one seems to really have a mandate to be in charge right now. First of all, let's just talk about David Cameron. He's there in Europe but he's a, you know, he's a lame duck Prime Minister, isn't he? He can't speak on behalf of the country. We are waiting to hear who is going to replace him. So, who are we looking at right now?

[03:15:03] ROBIN OAKLEY, CNN POLITICAL CONTRIBUTOR: I mean, the key figures in this are Boris Johnson who was a key figure in the leave campaign in the referendum, and Theresa May, the Home Secretary.

And the interesting thing is, we can't give too much credence to opinion polls but there is one in Times Today which puts Theresa May on 34 points ahead of Boris Johnson at 21 points among conservative supporters. That may be because although the conservatives have enjoyed Boris Johnson has a character. And feel he's the vote win when he won the London Mayor's job and he's been a key figure in the referendum.

He's a bit of a joker and some people feel they can't take him seriously. Maybe the feeling is that things are so bad now in Britain...

BOLTON: Yes.

OAKLEY: ... that they want a safer pair of hands. Theresa May, not deeply engaged in the campaign. A leader by instinct but remain out of loyalty to the government could keep both sides to the conservative party happy.

FOSTER: Are there possible contenders suggesting a second referendum as the solution as well. But on the Labour side, I know you got a paper here which really tells the story of Jeremy Corbyn.

OAKLEY: Absolutely.

FOSTER: (Inaudible) a big supporter of Labour and Corbyn they are wanting to go.

OAKLEY: Yes. There is one big supporter. Forty four resignations from his shadow team of ministers to be -- he's lost the confidence completely of the parliamentary party. But of course he's still got the support of what we think of most of the activists in the country. Vote of no confidence in him today. We'll hear the result of that

about 4 o'clock. It's not binding. Then the question is does Jeremy Corbyn take that message and step down or does he say I fight on and rely on the support of the people in the country, the activists in the Labour Party.

If they return him. And of course there's difficulty for the others in finding a unity candidate against him to run a leadership candidate against him. The Labour Party could be split for many years...

(CROSSTALK)

FOSTER: The point about The Mirror is, lot of them read The Mirror, right?

OAKLEY: Absolutely.

FOSTER: Thank you very much, Robin. Many young people here in Britain say they are horrified for the vote to leave the European Union. So, why did so many of them not even show up to the polls?

I'll tell you what the councilor he was working to get young Britain more involved politically.

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KATE RILEY, CNN WORLD SPORT ANCHOR: I'm Kate Riley with your CNN World Sports headlines.

The round of 16 is over. And it seems as so we left the best to last. We witnessed one of the biggest outset in the history of world football as Iceland knocked out England of Euro 2016. England actually got off to a flyer, scoring a penalty just three minutes in. And follow 30 minutes which will go down in Icelandic folklore.

First, (Inaudible) equalizing Corbyn. Dorson (ph) grab what would be the winner. Two 1-Iceland that would end arguably the biggest upset in the history of the tournament.

[03:20:05] Iceland now move on to the quarter finals and they will play to host the nation France.

The earlier game featured the two-time defending champion Spain who were eliminated by Italy. The Italians striking first in Saint-Denis. They say from (Inaudible) kicked from Giorgio Chiellini. Graziano Pelle finally broke through and put the game out of reach, two-nil Italy.

And the defending champs are out as if their round of 16 match wasn't tough enough, Italy will now face Germany in the quarterfinal. And hard to believe but we're already into the third tennis major of the year.

On the men's side, the question is, can anyone stop Novak Djokovic? And though they look as he may not even drop a game in his first round match against Britain's James Ward. He raced to a six lead before eventually wrapping it up in straight set.

And that's a look at all your sports headlines. I'm Kate Riley.

FOSTER: OK. Let's try to make sense of this for you. The European markets this hour as they open, 2 percent up. Actually you've got the Paris CAC up 2.25 percent. And it's quite an extraordinary story. An absolute roller coaster for investors across Europe this week.

We saw the markets sinking severely on Friday, sinking yesterday, but today they're up. We'll try to make sense of that for you throughout the day. It's really difficult for anyone to make sense of what's going on following the Brexit vote.

Many young people here in Britain say they are the ones who have to live with the consequences long term with the U.K vote not the short term figures. That vote of course to leave the European Union. And they're not happy about it, either.

Pollsters, if you believe them, say people under the age of 30 voted overwhelmingly to remain in the E.U. in Thursday's referendum. Once those over the age of 65 voted to leave by a wide margin. That spark anger on social media from some young people at older generations.

One Twitter user called the vote, quote, "A referendum nobody called for decided by generation who's future it won't affect." He added, "fantastic." But many shared this quote from comment -- the comment section of the financial times web site. "The younger generation has lost the right to live and work in 27 other countries who will never know the full extent of lost opportunities, frantic for marriages and experiences we will be denied."

But amidst the anger amongst young people here in the U.K., there's also this polling data saying that a younger Britons voted in much smaller numbers than older people in areas with highest youth populations had the lowest turnout.

Binita Mehta is here with me. She's a former conservative councilor who's trying to kept young people more involved in politics, which is a Europe conservative. So, people know where you're coming from.

There's a lot of -- let me put this to you. A lot of the young people winging and moaning about the outcome of this result, but they're partly to blame because they didn't come out and vote.

BINITA MEHTA, HERTFORDSHIRECONSERVATIVE FUTURE CHAIR: Sure. I think the turn out figure of 36 percent among people of my age group is disappointing. And although it's good to see how engaged they've become since the referendum results have been announced. I think this is a lesson to us as generation that we do really do need to engage in order to have our voice heard.

FOSTER: But you tried that, didn't you? People like you, getting young people out, you've working really hard on the campaign, and yet they didn't come out. So, what are they telling you now? Are they regretting that they didn't come out or were they just apathetic? MEHTA: I think there's regret for sure. And I think where there is an

appetite to engage in the future. There are things like leadership elections and possibly elections to come in the coming years where people my age will actually make sure they're registered for whether they are at university in another town, they'll make that time to make sure that they can have their voice heard.

FOSTER: Do they feel like their voice wasn't going to be heard, there was no point in voting or they were just disengage with the whole argument?

MEHTA: I think there's kind of a legacy issues with people my age, so, I'm 25, and my first general election when I was 19 years old, a lot of people in my generation voted for the liberal democrats, which thereafter perhaps betrayed them quite substantially.

So, there is a legacy issue here. We've had the expenses scandal, too, and people have become apathetic because they don't think necessarily they're being heard. But now we can see that these decisions are so important and they can't afford to let older people and older generations who won't feel the consequences make them on other half.

FOSTER: And this is part of a much broader context, isn't it? This is also in the context that house prices now are unaffordable, that the country is in a lot of debt, that people are in a lot of debt, debt levels are very high. And so, your generation feel that the older generation has completely handed over a poison chalice. And this is just part of that. they now can't travel to Europe in the same way.

MEHTA: Sure. No, you're right. And there is a big emotional response from people in my generation. You know, I've had friends contact me saying that they've been in tears. My sister when she found out about the result came to me crying because she wants to study at Erasmus.

She wants to go abroad. She wants to work for European Space Agency. And we just don't know whether these opportunities are going to be available for us anymore.

[03:25:04] FOSTER: And they don't necessarily recognize national borders since they don't have the same sense of nationalism? Is that right to say that they are more internationally?

MEHTA: Very much, indeed. And we all very much clueless (ph) to that approach. We do find hoping on the euro star to France so easy. And that is now a barrier which we didn't have to face in our lifetimes.

FOSTER: Yes. Is there a sense of anti-capitalism as well slipping through, you think?

MEHTA: Perhaps in my age of group?

FOSTER: Yes. Because you're conservative. Yes, but broadly, what do you think -- you know, as you move on in your political career, do you think you're going to be challenged more by anti-capitalism groups rather than a generation for you? MEHTA: I think there will a load of challenges coming from the

younger generation. I don't think it's as easy to say as people are anti-capitalist or the 4,000 people who turned out to rally for Jeremy Corbyn...

(CROSSTALK)

FOSTER: But you are attuned to the vibe?

MEHTA: Yes. And I don't see that my friends are capitalizing. There is, people want to buy houses. People are emotional because house prices, you know, they might not be able to buy a home in London, perhaps, where they want to live where they have this job opportunities.

And so, I don't -- I don't find that at all. But I do think that people are generally uncertain about jobs because things are such influx right now and it's something that we need to steady. And I know that given the leadership election going on, my party very soon will have some stability.

FOSTER: Whom you're supporting?

MEHTA: I've not decided yet. We'll see who the contestants are in the coming days.

FOSTER: Really? Thank you very much indeed. A quick programming note for you. Christiane Amanpour will be interviewing the Italian Prime Minister, Matteo Renzi, live in the next hour for you, a very big interview going into that summit meeting today.

We'll be back in a moment.

[03:30:00] (COMMERCIAL BREAK)

CHURCH: Welcome back to our viewers here in the United States and all around the world. You are watching CNN Newsroom. I'm Rosemary Church at CNN world headquarters in Atlanta.

FOSTER: I'm Max Foster live in London just outside Parliament.

And have a look at these European markets. They're showing some signs of life, let's say, after the Brexit vote. Opening with some quite big gains. More than 2 percent, 2.5 percent now in Paris. I sort of chuckle because it's so baffling for investors right now.

And in the hours ahead, the British Prime Minister David Cameron will try to provide some clarity as he comes face to face with the E.U leaders for the first time since that U.K. vote to leave the European Union.

He'll arrive in Brussels in about three hours where he'll meet the, first of all, with the European Commission president, Jean Claude Juncker. Later, he'll attend the working dinner with other E.U. leaders including German Chancellor Angela Merkel, French President Francois Hollande, and the Italian Prime Minister Mateo Renzi. We are covering this from all angles. My colleague Jim Bittermann is in Paris. CNN's Atika Shubert is in Berlin. But we're going to go to Jim first today. So, we've got this new access. It's interesting, isn't it.

You would -- France, Germany, and the U.K. before. And now we've got France, Germany and Italy. But how is France going into this negotiation or this summit, I shouldn't say negotiations at this point, but summit today.

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, French would like to see negotiations back. That's what President Hollande has been pressing for. And let me just say, let me just read you a paragraph that he said at the end of the meetings yesterday between Merkel, Renzi and Hollande, he said, "We must show responsibility at this moment even if it's sad. Responsibility means not wasting time to deal with the question of the departure of the United Kingdom and not wasting time either."

And the question of stimulus we must give to the European 27, already discounting Britain as part of the 28-member European Union.

So, Francois Hollande would like to see things move ahead quickly. And were effective this, the European Parliament over in Strasburg hammered that point home today. Because they got a law that nonbinding resolution that they're going to adopt apparently.

That's going to put pressure on Britain to make a decision quickly. It's what a lot of people have been saying. One further note, Max, and that is that there's been a lot of talk about the Brexit, the possibility that there would be a contagion effect with the British leaving the European Union, that the French would like to do that too.

But an opinion way poll that's out this morning seems to indicate that the French would be in the opinion not to leave the European Union by a score of 53 to 31. That opinion way poll taken for the French Senate that basically shows that there's still 16 percent of the French would be undecided on that question. Max.

FOSTER: In terms of how Francois Hollande handles the U.K. from here, certainly here in London, those likely to have a senior position in the next government want to have some informal negotiations before the formal ones start.

I heard from a German MEP earlier that they would regard that as illegal. There's only one mechanism for Britain to leave the European Union and that's the formal negotiations which Britain has to start but they don't want to start it before they're ready.

So, how is France going to handle that? Do they just go into some sort of deadlock until they go into that formal process?

BITTERMANN: I'd think that's exactly what we're looking at, a deadlock. And there are a number of critics here about this idea that -- over the idea that Britain would let things hang until the 2nd of September or whenever they can come up with a new prime minister.

That's what David Cameron said it's the new prime minister's job to trigger this Article 50 and get the ball rolling. And I think the French would be of a mind along with Germany that you can't do anything until there's a formal request by the British government to leave the European Union.

It just makes sense. Any kind of pre-negotiations wouldn't make any sense or have any value. So, I think that the French are very frustrated over this situation which is going to drag on throughout the summer months apparently, Max.

FOSTER: OK. Jim, thank you. German Chancellor Angela Merkel says she does not want to enter into talks until the U.K. formally starts the exit process from the E.U. either.

For more on that let's go to Atika Shubert in Berlin. So, you've got this unilateral position really on the part of the French and the Germans. SO, they're not going to go into formal talks, so that pretty much says it to London, doesn't it, unless London starts that process, there's deadlock.

ATIKA SHUBERT, CNN CHIEF INTERNATIONAL CORRESPONDENT: Absolutely. Germany, France, Italy, all closing ranks here and saying until they get the invocation of Article 50, there will be no informal talks at all, which is exactly what many Brexit supporters did not want to hear.

[03:35:04] But Merkel has given a little bit more leeway. She's not calling for Article 50 to be invoked immediately. She said, you know, she understands that the U.K. does need sometime. But at the same time, she said, this can't be a never ending story, that's what she said yesterday in the press conference.

So, but it's very clear that the message from the E.U., from Germany and France, especially, the two heavyweights here in the E.U. is, you know, take your time thinking about this, but don't call us, we'll call you. And that puts the U.K. certainly into a very difficult negotiating position.

FOSTER: And really what's the point into these meetings, did she say, Atika? Because what can David Cameron, who's on the way out really do to help with the European view? Because he doesn't represent the next government and he's actually lost the -- lost his campaign, didn't he? So, what really can he do for Chancellor Merkel, for example?

SHUBERT: Well, there's not a lot. In this case, the U.K. really has lost all of its levers that it could push to negotiate. What we're going to be hearing today in Parliament is -- in German Parliament is Chancellor Merkel laying out her strategy for the U.K. leaving the E.U.

After that she's going to fly off to Belgium and she's going to hear in Brussels what Cameron has to say. But you're right, there's not a lot he can do at this point. Even the U.K.'s commissioner in the E.U. has resigned. So, they've even lost their voice on the commission. So, he's looking at a very awkward and dire situation there, one of

the few friendly faces will actually be Germany's Chancellor because she has said take your time on this but think long and hard, because one thing -- Article 50 is invoked, there is no going back.

FOSTER: OK. Atika, thank you very much indeed. Lots of developments in Europe. We'll keep across them for you. Another unforeseen consequence of the Brexit, the E.U. could lose English as one of its official languages, one the U.K. -- once the U.K. leaves the bloc and the language loses its sponsor.

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MARIA HUEBNER, E.U. CONSTITUTIONAL AFFAIRS CHAIR: Every country has the right not to have one official language. And the Irish have not to say Gaelic which is Irish and the Maltese have notified Maltese. So, you have on the U.K. notifying the English. If we don't have U.K., we don't have English.

(END VIDEO CLIP)

FOSTER: Well, English is one of the three working languages of the E.U., so it could remain a working language even if it were no longer an official one but that will require an agreement by all member states, just showing the process that has to unfold from here.

Capping several rough days, England gets another shot meanwhile. Their football team suffered a devastating upset against Iceland at Euro 2016. Some saying it's the worst loss ever. England's population is more than 160 times larger than Iceland's, but all that mattered on Monday was the finally score and that was 2-1.

That stunning result led to England's manager resigning. His counterpart over there on the Icelandic side we understand is a part time dentist.

CNN World Sports Christina Macfarlane is following this. I mean, we're going to put our personal allegiances aside and we are going to champion Icelandic's -- Iceland's incredible performance last night. But what was the football like? Did they deserve it?

CHRISTINA MACFARLANE, CNN WORLD SPORTS ANCHOR: Oh, they absolutely did deserve it, Max, and not to want to overshadow -- let's not want to overshadow that performance, because they really took the game to England yesterday.

And the reason this is such a big shock is not just the fact that they're minnows, but they completely outplayed the England side yesterday. They were ruthless, they were organized, they were everything that they displayed, incredible teamwork, they everything that England went off.

And now England out of Europe for the second time in a week of course. And as you say, it will go down as one of the worst moments in England's football history, in fact, worse even than the loss back in 1950 at the World Cup where they lost 1-nil to the USA. And as you say, Iceland, such a tiny nation, only 330,000 people. They

have more volcanoes in fact than they do professional footballers. The manager of England, Roy Hodgson, you know, just to show the discrepancy was earning $4.6 million.

The manager of Iceland of course is a part-time dentist. You know, four years ago, they were ranked 133 in the world. Well, look at them now. They're into the quarterfinals of the European Championship against France and I have to say Iceland now, fancy their chances.

FOSTER: How can England sort this one out?

[03:40:03] MACFARLANE: Well, yesterday as we saw straight after the end of the match, Roy Hodgson came out and he resigned. So, they will now need to regroup. The post-mortem begins, they need to look for a new manager.

But big questions are being asked, as to why they keep failing on such an international scale. You know, they've never won a knockout game abroad outside of the European Championships. And they haven't won outside a group stage of a championship, a major championship since 2006.

And these are players who come from the -- you know, the most -- supposedly the greatest and most lucrative league in the world, the English Premier League. Harry Kane was the leading goal scorer of that league last year. He hasn't scored a single goal in the European Championship so far.

Wayne Rooney is the all-time English goal scorer. He was incredibly sloppy yesterday. And of course this is a huge disappointment for the fans. Because just two years ago, they went out of the group stages of the World Cup and this was meant to be the team who revitalizes England's chances. Instead, we've all been left incredibly depressed and deflated today, Max.

FOSTER: Oh, well. Good on Iceland, anyway. Thank you very much, Christina.

Scotland is pushing to stay in the European Union for that stay. And the first ministers laying out several options for the country as well. We're going to get you the details next on CNN Newsroom.

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FOSTER: Welcome back to you. Now, north of the border from here. Scotland is trying to figure out a way to stay in the European Union. First Minister Nicola Sturgeon is set to speak to the Scottish Parliament in the coming hours.

She suggests that the parliament could block the Brexit legislation.

CNN's David McKenzie joins us now from Edinburgh in Scotland. I mean, that's a big step to take, isn't it? But today, it's going to be the first sense of what the wider Scottish or Edinburgh Parliament thinks about this. We've only heard from Nicola Sturgeon so far. [03:45:11] DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well,

that's right. And, you know, the Scottish National Party, Max, has the most of the seats but not a clear majority of the Scottish National Parliament. So, they'll be looking to reach across the aisle and try to get some reunification to stay in the European Union.

I think that's the first step for Nicola Sturgeon to try to show a united front in sharp contrast to the chaos in Westminster that's seeing shadow ministers resign left, right, and center.

They want to really show that they want to show the mandate of the people here in Scotland, who overwhelmingly voted to stay within the Union. And several times, the first minister has said that that's a prospect of being pulled out of the Union against the people's will is undemocratic.

So, you will see an emergency statement from Sturgeon in the parliament and some debate most likely. The next step may be to call for an independence referendum, but to kind of reach across to conservatives particularly, they may want to sort of dial that down a little bit initially, but really, it's to show a contrast with Westminster and to try and stay in Europe. Max?

FOSTER: What do the wider Scottish public think of all this? Or do they just think it's high politics and they've lost touch with it?

MCKENZIE: No. You know, it's interesting, because there is a sense of pride, at least here in Edinburgh that we've gotten from people. And that doesn't represent of course wider Scotland. But when you add up both the levels of people who voted to stay in the E.U. and also the kind of informal poles that have been held in the last few days, there does seem to be an admiration of Nicola Sturgeon's kind of planning, you know.

That Friday morning when a lot of the country was -- political class in the country was thrown into chaos, there was a sense that she had a plan. And that's certainly can't be said for politicians in Westminster.

So, there is a sense that they on some level know what they're doing but the legal and diplomatic ramifications of trying to stay in the E.U. is very unclear, so we'll get a sense of that today.

FOSTER: She's certainly stood out as a leader, hasn't she, in the last few days? Thank you very much indeed, David McKenzie. Our Brexit coverage continues in just a few moments.

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PEDRAM JAVAHERI, CNN METEOROLOGIST: Thank you for staying with CNN. I'm meteorologist Pedram Javaheri with Weather Watch right now for the Americas.

Of course, the Southwestern United States talk has been all about fires in recent weeks across this region. And couple of the big fires are beginning to see some containment across the let's say, the Sherpa fire towards the San Gabriel complex. Fire were 70 to 90 percent of the fires have been contained.

It's the Erskine fire across this region of California into the central valley there where 40 percent containment so far. The concern is the extreme temperatures, the lack of rainfall in the forecast, until at least later in the week. We don't see much in the way of significant cooling.

So, that's something worth noting across this region. But another seem worth noting some monsoonal moisture trying to push in towards the Southwestern U.S. The good news there at least for parts of New Mexico and Arizona.

You notice some thunderstorms along the Gulf Coast states as well. Plenty of activity into the early morning hours. And if you've got travel plans towards New Orleans, Louisiana something worth noting here is storms beginning to roll from north to south around a area of high pressure in there.

I notice that area of high pressure also bringing in some cooler air around parts of the Western United States in the next couple of days.

[03:50:01] So, we'll take a mild 21-degree day out of Chicago while Vancouver and San Francisco will do about one to two better, they are 22 and 23 respectively. And notice the eastern seaboard does want to begin a warm up significantly the couple of days, we'll make it well into the 30s across that area. OK. To the south, how about Mexico City, around 24.

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CHURCH: Hello, everyone. I'm Rosemary Church. We will get back to Max Foster in our Brexit coverage in just a moment.

But first, a check of some other stories we're following.

In CNN's latest poll of polls, Hillary Clinton leads Donald Trump in the race for the White House. The presumptive democratic nominee is at 48 percent with Trump trailing seven points behind.

The survey reflects the most recent national polling among registered U.S. voters. As his poll numbers slip, Donald Trump is backtracking on one of his most controversial proposals. The presumptive republican nominee is altering his plan to ban Muslim immigrants from entering the United States.

Sunlen Serfaty has the latest.

SUNLEN SERFATY, CNN CORRESPONDENT: Donald Trump's abandoning of his complete Muslim ban isn't the only example of the presumptive nominee softening his position. He's also reigning in his tough talk on immigration, no longer featuring his call to deport undocumented immigrants in his stump speech.

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DONALD TRUMP, (R) U.S. PRESIDENTIAL CANDIDATE: We want people coming into our country but they have to come in legally.

(END VIDEO CLIP)

SERFATY: But one area where Trump is not dialing things back his criticism of political opponents. The presumptive GOP nominee today blasting Elizabeth Warren after the progressive fire brand attacked him during an appearance with Hillary Clinton.

(BEGIN VIDEO CLIP)

ELIZABETH WARREN, MASSACHUSETTS SENATOR: That's who Donald Trump is. The guy who wants it all for himself. And watch out because he will crush you into the dirt to get whatever he wants.

(END VIDEO CLIP)

SERFATY: Trump responding that Warren is a racist. Once again referring to Warren by his favorite nickname for the Massachusetts Senator, "Pocahontas," telling NBC News, quote, "She used the fact that she was Native American to advance her career. Elizabeth Warren is a total fraud."

Trump's attempt at making some recalibrations coming just one week after the firing of its campaign manager, Corey Lewandowski. And with his campaign facing serious headwinds.

New polls show Hillary Clinton with a clear lead in national polls and revealed real warning signs for Trump beneath the surface. While both candidates have high unfavorable ratings, more voters see Trump in a negative light. In a half two thirds of voters see him as unqualified to be president.

An assessment that even Senate Majority Leader Mitch McConnell tried to dodge.

(BEGIN VIDEO CLIP)

MITCH MCCONNELL, U.S. SENATE MAJORITY LEADER: He's made a number of mistakes over the last few weeks. I think they're beginning to right the ship.

(END VIDEO CLIP)

SERFATY: Refusing to say whether he believes that Trump is qualified to be president.

(BEGIN VIDEO CLIP)

MCCONNELL: Look, that will be up to the American people to decide.

(END VIDEO CLIP)

CHURCH: The U.S. Supreme Court has made its most significant decision on abortion in the past two decades. The ruling could have a major impact on efforts to limit access to clinics that perform abortions.

Mary Moloney has the story.

MARY MOLONEY, CNN CORRESPONDENT: Cheers and hugs outside the highest court in the land. After the Supreme Court struck down a Texas law restricting access to abortion.

(BEGIN VIDEO CLIP)

AMY HAGSTROM MILLER, WHOLE WOMAN'S HEALTH FOUNDER: After years of fighting heartless anti-choice politicians who would seemingly stop at nothing to put abortion out of reach, I want everybody to understand, you don't mess with Texas women.

(END VIDEO CLIP)

MOLONEY: Miller have required abortion clinics to upgrade their facilities to hospital-like standards and mandated clinic doctors have admitting privileges at nearby hospitals. Supporters of the law argued to raise the level of care for women.

(BEGIN VIDEO CLIP)

[03:55:01] DAN PATRICK, TEXAS LIEUTENANT GOVERNOR: Even one having an abortion, it doesn't matter what you're in the hospital for or in a clinic for, you should have the ultimate safety standards. We're not a third-world country, but the Supreme Court leftists apparently don't understand that.

(END VIDEO CLIP)

MOLONEY: The laws opponent said it would have closed but handful of clinics in Texas. In the majority opinion, Justice Stephen Breyer wrote, "The Texas law provides few if any health benefits for women. It poses a substantial obstacle to women seeking abortions and constitute an undue burdun on their constitutional right to do so."

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Women across America have had their constitutional rights vindicated.

(END VIDEO CLIP)

MOLONEY: In a bitter dissenting opinion, Justice Clarence Thomas wrote, "The court has simultaneously transformed judiciary created rights like the right to abortion into preferred constitutional right while disfavoring many of the right actually enumerated in the Constitution."

(BEGIN VIDEO CLIP)

MADDIE SCHULTE, ANTI-ABORTION ACTIVIST: We were really disappointed and the five justices have let us down. We did face the law but the pro-life generation is coming back stronger than ever.

(END VIDEO CLIP)

MOLONEY: I'm Mary Moloney reporting.

CHURCH: Well, it's also say Volkswagen is set to announce a record $15 billion settlement in its emissions scandal. The German automaker admitted to selling about 11 million cars with software designed to cheat emissions tests.

The settlement would cover consumer claims and fines. A federal court still has to approve the deal. The company faces additional civil and criminal investigations.

Egypt says French investigators have fixed the flight data recorder from EgyptAir flight 804. Repairs on the cockpit voice recorder could wrap up within hours. The black boxes could show what caused the plane to crash into the Mediterranean last month killing 66 people.

And we'll be right back with more of our coverage of the Brexit with our Max Foster in London. I'm Rosemary Church in Atlanta. You are watching CNN.

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