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Cameron To Meet EU Leaders In Brussels; EU Parliament To Hold Special Session; European Stocks Rise In Early Trade; Italian Prime Minister Says Brexit Could Be Great Opportunity; Italian PM Says Italy Will Ensure Its Banks Are Secure; Labour's Corbyn Faces No-Confidence Vote, Is Defiant Amid Cabinet Exodus; Merkel Says No Brexit Talks Until Article 50 Invoked, Says Close Ties To UK Will Continue; Merkel Says EU Must Learn Lessons From UK's Exit. Aired 4-5a ET

Aired June 28, 2016 - 04:00   ET

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

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[04:00:22] MAX FOSTER, CNN ANCHOR: Hello and welcome to our viewers in the United States and around the world. I'm Max Foster outside the British houses of parliament in London. This is CNN Newsroom.

Just a few hours from now British Prime Minister David Cameron will face leaders from across the European Union for the first time since the U.K. voted to leave the block, members of the European parliament in Brussels to figure out how to navigate a potentially messy divorce. Some European leaders have says, the U.K. should start the process as soon as possible, but Mr. Cameron saying it won't happen until Britain has a new Prime Minister. Which will take weeks, perhaps even months will be live in Brussels a little late from the show.

Here in the U.K., domestic politics are in turmoil. The finance minister is warning a thresh spending cuts and tax increases MPs from Labour, the main opposition party is set to hold the vote of no confidence and their leader, Jeremy Corbyn today have been speaking with the Labour member parliament to get his sense on what's happening there.

And despite the upheavals, European stocks are getting a bit of a reprieve after state (ph) losses since the referendum. An hour into the trading, industries are all higher quite significantly well over 2 percent would you believe? Stay tuned for updates on that as well.

One European leader who believes the Brexit couldn't that be a great opportunity for Europe is Matteo Renzi.

Let's go to our Chief International correspondent Christiane Amanpour who's about to speak with the Italian Prime Minister, Christiane.

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL CORRESPONDENT: Max, indeed and this is a meeting like no other. Prime Minister David Cameron is going to meet all his other 27 heads of government to try to explain what happened here in Briton on Thursday and to try to figure out the least painful way forward.

So, we are joined by the Italian Prime Minister Matteo Renzi who's already in Brussels and awaiting this meeting with all his other heads of government. Prime Minister, Welcome to the program.

MATTEO RENZI, ITALIAN PRIME MINISTER: Good morning. Thank you so much for the invitation.

AMANPOUR: Let me first ask you from a personal perspective and from the perspective of the European leader. How do you feel, what is your reaction to the British votes to get out of the E.U.?

RENZI: The first reaction obviously is the shock because in the Easter Europe who was the place of peace and the place of a big family who grew up in the easterly. For the first time we reduce the number but I think we must respect the vote of citizens.

So, this is a time to react. The British people decide, they votes, we respect this vote and now is the moment to turn the page and to look at the future because Europe is a great country, it's a great continent, it's a great family but Europe is also placed for the new generation. So, I think the shock is correct but this is a time of new hope not of the shock - only the shock.

AMANPOUR: So, let me separate those for a moment, on first and foremost. What kind of reaction do you think Prime Minister Cameron will get? I mean this is possibly his last face to face in terms of real sort of meet-and-greet talks with European leaders.

What are you going to say to him? How do you expect him to address you and will there be any actual substantive talks about the way forward at this time right now?

RENZI: I am close friend of David and I will respect the decision to call the referendum but when the referendum was organized that now we have an alternatives to open the procedure of Article 50 who means that the exit of British from UE.

This is the only way obviously we respect the discussions inside, a conservative party in U.K. and also in the Labour Party. And so, I think this procedure, we will open after the decision of Congress of party in September but if we can wait for some weeks to decisions of a English party. We don't wait for a lot of times because institutions, financial markers and particularly citizens don't -- can -- it's impossible for them to continue with lack of certain time.

[04:05:10] So, we respect the decision. We wait for reopening the schedule but then we must discuss not about rules and procedure. We must discuss about the future of Europe and we are ready to open a new season for Europe with investment and not only with financial discussions. This priority for me in this moment, we respect David, we wait for the decision but if not possible to continue to lose time.

AMANPOUR: Well let me ask you, you must be watching with some bemusement. The reaction here in the U.K. since the vote, there is a lot of division about what the whole vote means and indeed some key members of Leave campaign. Let's say changing the goal post, moving the goal post about what they want. They want access to the single market. The principles are saying, they may be willing you know, to walk back some of the immigration talk. Is there any room according to the E.U. to allow Briton to remain part of the single market and give Briton more ability to restrict the free movement of European people and labor?

RENZI: In my view. It's impossible to belong to community only with the good things and with the bad things. In every family, if you belong to a family. You must accept the good things and the bad things. It's impossible to stick only about single market and don't accept at politics about migration. It's impossible to be very communitarian about the economy and not about values.

This is the problem in my view about this campaign and I'm really touched personally by the all reactions of young people in U.K. I propose yesterday to Angela Merkel and to Francois Hollande to give a possibility opportunity to young students by U.K. the people will visit, will study in the European Universities in my view must have the possibility to have the European citizenship and the European passport.

So, I'm ready to create some initiatives for the people who come from U.K. but it's impossible to accept the idea for U.K. is possible to breathe only the good thing from European ideals and not the problem. I'm Italian. I know the reaction about migration. We discussed just some months ago Christiane about the risks for migration. You discuss about the risk in Mediterranean become a symmetry. Now is the time to have a solidity of Europe and also common values not only a common market, we are more than financial values, we are ideals values. This is my priority and the priority for Europe in my view.

AMANPOUR: Well, Matteo Renzi Prime Minister, you seem to be under threat in your own country, Italy because Italy, France, Denmark, and many other countries have nationalist movement and protest movement that also want to get out of Europe. They're calling for referendums everywhere we look, in Netherlands, et cetera. Is this a serious worry and people fear if one is called in Italy, you know, it might win. How worried are you about the contagion?

RENZI: I don't know if it's possible to give the same value to different populist just to make an example initially (ph) five star movement is very close to forage movement and. They sit in the same place as in the European parliaments. But in France the marine let in party is very close to Lega Nord in my country.

So there are differences between the populous. My opinion is that this moment is a moment of change, very stronger change. The differences are not the traditional difference between the right and the left. But the fear and the courage but award based and focused on the rules as to some leaders old senior European Union are proposed and a world focused on the square and opening on the dialogue. I think my country is a great country because believe in the future focused on the square and not on the worlds.

[04:10:01] This is my position. I know, there's a possibility to implement and to increase populist movement also in Italy and Demark and France. But I think this is the time of the very strong answer and very strong reaction focused on the values of Europe. If we discussed only about financial situation and the procedure brought out (ph) the procedure it's obviously we will see an increasing by movement of populist. If final, we discussed about social Europe about in employment, about values, about the people who believed in the ideals. I think Europe come back to be our home and populist will be defeat.

AMANPOUR: Prime Minister, is that what you mean about this could be a new opportunity for Europe and I ask you because, as you know, today many of the east European nations inside the E.U., the former Baltic nations as well are mounting sort of a challenge to the E.U. leadership and saying that they haven't performed well and that really it's a time for massive change. So, there's a real division amongst you all as well.

RENZI: Yes, the risk of division is clear. I know, I see these risks but exactly for that, my proposal and not only mine is in vast in the idea about future. Sixty years ago in Rome, the great man, of the founder fathers of Europe signed the first Straits (ph) about not only steel and energy but about common values. They used the steel and energy to create a family who gave us 60 years of peace for the first time in history.

But in this case they used to think more important and not only the problem of division. This is the same time we must invest in a different approach about Europe. And this is important also for the Baltic and for the older countries. Ever year my country gave $20 billion of Euro to European budget to give a support to this country.

And when we come back, we give back only 12 billion. So, we lose a lot of money to give a future to the new countries in Europe. It's time to use this money, not only for economic approach, but also for the value approach for the young students, for the people who believe in the values. It's not time of division. This is a time of vision. A vision for the future of Europe and as a member of a new generation, because as a 41-year-old, I think this is the real priority for the new generation, not the division between politicians but the division for a new generation of leaders. This is our priority and it's our challenge of now.

AMANPOUR: And finally, prime minister, since markets are open all over Europe, can I ask you about the security of your own bank? Because two of the biggest Italian banks have fallen about 20 percent in terms of their share value since the Brexit vote. Are your banks safe? Are you doing anything to keep them safe?

RENZI: Italian banks are very good banks with a problem in same of debt banks. The problem was the lack of decision in the past by my predecessor to use bad bank, a public bad bank. Just to make one example, Germany who is the leader in the economy in Europe used 250 billion of Euros to give an important to have two banks. Italian leaders decided don't use this possibility.

Now it's more difficult to make this choice because the rules are different but I'm confident and I'm sure about the safety for consumers and for citizens because we are ready to make everything a necessity to save customer and the citizen's security.

This is the priority. Obviously when we speak about security, we must speak also about borders, about frontiers, about security, about migration. But in this moment, I'm absolutely sure about banks, customers and citizens could be in security situation because we are ready with European institutions to make everything necessary if necessary for the moment knocks to save every money of citizens. So, don't worry for that. The real challenge here is create a vision for the future. This is challenging but it is also the beauty of politics.

[04:15:10] AMANPOUR: On that note, Italian Prime Minister Matteo Renzi, thank you for joining me from Brussels this morning.

RENZI: Thank you, Christiane.

AMANPOUR: Thank you.

And back to you, Max. You can see the prime minister had a huge amount to say about what just happened in his vision for the future.

FOSTER: Yeah. I just wondering, I mean I'm speaking to people here (inaudible) Christiane and everyone here is assuming there can be some informal talks before that formal chapter 50 process comes into effect. But also that whatever comes out of this, Britain is going to have access to the common market. And what the prime minister there was suggesting is that Britain is not going to get either of those. Which is a huge problem for little the messaging coming out from here.

AMANPOUR: Well Max, it is. Because look, leading up to the vote, the leave side, you know, was talking about these issues. And after the vote as they saw, obviously what happened to the pound and the market, and actually the division within the United Kingdom anyway. The narrowness of the vote and the disappointment of so many people on the other side, they have been using words like temper some of the promises. Whether it's about migration, whether it's about the single market, et cetera and they really are counting. And even today as you say, amongst the British political class, particularly the leaders, they are counting on being to lay out their own vision and then taking it to Brussels to get Brussels to agree with it. And you heard what the Italian prime minister said and that backs up what the other leaders are saying as well.

But we won't have formal discussions today when Prime Minister Cameron says we won't have formal discussions. You can't just negotiate in a vacuum before triggering Article 50. And by the way, if you do want to have access to the single market, which is really crucial, every economist who's weighed into this debate and said, all of these 99.9 percent of them, really crucial for the continue of prosperity and economic health of Great Britain.

Then you do have to accept the other part of the equation that is free movement of labor. But you heard how he put it, he said you can't accept but just the good and discard the bad. So, you know, right now they're not obviously going to negotiate in public. But that's their position right now. FOSTER: OK. Christiane, thank you very much indeed. When we're looking at how that interview, those meetings today will play into the leadership campaigns currently underway her here, both on your position and the conservative party, those leaders trying to Downing Street to replace David Cameron.

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[04:21:39] FOSTER: The British Prime Minister heading to Brussels from here today where European leaders have came to get a quick resolutions to the Brexit fallout. We just heard from one of them, the Italian Prime Minister -- our Italian internal (inaudible) sorry, fly into my mouth very distracting.

Nic Robertson joins me now with the very latest from there. Just off back of that interview with Renzi, Nic. The suggestion there is that you're either in or out you're in the family or out of the family, and this idea that Britain could compromise or come up with some sort of recognize and negotiate it today isn't happening.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: That's right, Max. I mean this idea that you can't have the good and leave out the bad. That is you can't have access to the markets without having to deal with the immigration issue of the freedom of movement of people. And so, it's very simple. This is what Britain will be presented.

It doesn't matter which slice or direction they try to move in with the European Union in the future. A complete exit and start over or they try to take the model of Norway, which is sort of access to the economic benefits, if you will -- they still have to take in citizens from the European Union. And Matteo Renzi made that very, very, very clear. This is the options, if you will that Britain will be presented with.

Number one, no negotiations on the margins but number two, when you do get down to it, you can't just take what you think are the good bits and leave out the bad bits, Max.

FOSTER: OK. Nic, thank you.

Here in the U.K. there's mounting uncertainty over just what sort of future the country has, pretty much, but also the leadership of it some main opposition party reports say Labour MPs are fairly non- binding, low confidence votes on Jeremy Corbyn in a few hours and a bit how Steven (ph) battle party leader. He lost more than half of his cabinet since Thursday referendum. He's being blamed for not supporting the Remain campaign strongly enough.

And with me is the Labour MP, Adrian Bailey he was the one of the first to come out of the gates for Jeremy Corbyn. Just describe the frustration, with his contributions to the campaign, where did he go wrong?

ADRIAN BAILEY, U.K. MEMBER PARLIAMENT, LABOUR: Well, for a start he was very slow into the campaign. And for the first couple of weeks we had it dominated by the Tory Party in fighting over the leadership. And secondly, when he did get in, he just confused his message. He seemed to want to spend as much time criticizes Europe as he did some people should support it. The result was, at the end of the day, there were literally thousands of Labour supporters who did not know where the party stood on it. And quite a few went in and voted Leave under the impression that Labour was not in favor of the E.U.

FOSTER: And all the speculation yesterday that indeed voted leave.

BAILEY: There certainly has been speculation. And you will fails when ask to straight question somebody who was committed to E.U. would've been quite unequivocal in saying that he had a vote. The remain ...

FOSTER: Are you out back to him tonight?

BAILEY: Well, I don't know if I got the chance to doing ...

FOSTER: But you are expected to be put to him.

BAILEY: It has been put to him I believed and he is being very evasive ...

FOSTER: Not answering whether he vote it in or else?

BAILEY: This is to what I'm bad being told, yes.

[04:25:00] FOSTER: It's an extraordinary series of events, isn't it? But just explain to us the process of events as it's start now because Jeremy Corbyn is just by you and your colleagues. He's staying in position and that's based on the fact that he has grassroots and trade union supports. The parliamentary party is just part of a support that he needs. So, how does the process work? How'd you get rid of him? I know that I'm not, you know, from your perspective not from mine obviously?

BAILEY: Well, we are in uncharted territory I have to say and I don't think there are not rules within the Labour Party that actually govern certain circumstances like this. So there's an element of conjecture here. But as I see it, if the vote of no confidence is passed today, then Jeremy has two options. He can try and tough it out in which case I think the parliamentary Labour Party is going to challenge and there is very speculation that they might even try and elect their leader in parliament as opposed to having Jeremy Corbyn as Labour Party leader.

I'm told there was a precedent for that in the 1930s where George Lance break but I have not such a knowledgeable ...

FOSTER: But they are looking into that, yeah.

BAILEY: But that is one possibility. The other is that Jeremy would decide to take it head-on and resign, making it clear that he will run in the new leadership.

FOSTER: And it's going to take a very brave MP to stand up against him. Because he does have supports amongst the members, and he does certainly that the unions will come out to support him. So, who on earth is to stand against him knowing that he may will win?

BAILEY: There is no shortage of able candidates who will stand against him because I think the mood of the POP is unless we do have somebody to run it against Jeremy, there's no hope whatsoever winning an early election. And there are plenty of MPs with the guts to do it. The issue of the membership it's perfectly true that he won the election match here with a substantial majority.

However, there is increasing evidence from the day-to-day contract we have amendment that some of his support is now evaporated because he's been seen not to deliver and unable to deliver in a general election.

FOSTER: Adrian Bailey a busy day, a late night for you, thank you very much indeed for joining us. You're watching CNN's special coverage of the fallout of the U.K.'s decision to leave the E.U.

After the break, we'll take you live to Berlin. Chancellor Angela Merkel is due to brief German lawmakers on Brexit. Let's see what's she's got to say.

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[04:31:01] FOSTER: You're watching "CNN Newsroom." I'm Max Foster live in London just outside of the Houses of Parliament and Chancellor Angela Merkel meanwhile in Germany is due to start speaking in the German parliaments any moment now. The focus will not thought be on Brexit.

Some European leader say they want the UK's exit process to start soon, but Merkel has said no talks can begin until the U.K. triggers Article 50 in the E.U. constitution. That's the clause to outlines the procedure for a country to leave the block.

For more, Atika Shubert joins us now from Berlin, we are hearing that from the Italian Prime Minister we know that he's been speaking to Chancellor Merkel, his position very clear that the formal process needs to begin and Britain won't have access to the common market. While not accepting all the bad past of the E.U. as well him saying, so we can assume that that's her view broadly as well.

ATIKA SHUBERT, CNN SENIOR INTERNATIONAL CORRESPONDENT: Absolutely and she's made it very clear that yes, there is a little time for the U.K. to think before it invokes Article 50, but there would be no bargaining, no negotiating, however informal, until Article 50 is invoked of course, that legal mechanism to leave the E.U.

Now, what she's expected to say before German lawmakers stays to brief them on this policy. But also to say this is a renewed opportunity to reform the E.U. And this means putting more political will by cooperating on some key issues to add security, but also social and economic issues, making sure there is more growth and help with unemployment.

This basically is a way of saying, listen we need to make the E.U. stronger. Even though the U.K. has essentially voted to leave, this is our opportunity to buckle down and do the reforms that we've been putting of for a long time. Now, she should be speaking any minute now. But this is the strategy she's likely to be laying out. And then she'll very quickly be getting on a probably a helicopter and heading on her way to Brussels to meet with Cameron and other E.U. leaders there.

FOSTER: We are just waiting for translation on it, Atika. But in terms of the pressure on her domestically, what does she have to prove in these negotiations to her own country? Does she have to be tough or can she be more diplomatic with the Brits than the French for example.

SHUBERT: I think clearly she shown that she's going to be a bit more diplomatic. I mean we saw yesterday in a press conference with Italian Prime Minister Matteo Renzi And French President Francois Hollande, that it was Merkel who said settle us in you have a little bit of time here there is a window, a reasonable period of time is fine.

However, this cannot go on forever. This does not end in a stalemate.

So at that sense she's probably the friendliest face that Prime Minister Cameron is going to see in Brussels. But also may indicate it clear there will be no bargaining. Now, we understand we have the translation coming in. Let's take a listen.

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ANGELA MERKEL, GERMAN CHANCELLOR (Through Translator): ... often diametrically opposed, some say we should have stronger integration. Others say the European level should have more rights. Others say we should divulge rights back to the member states. And others again the remember states should deal each with their own matter.

So, the union offer 27 -- anybody who can unify this union and lead it together out of this crisis is very welcome. All of this will have consequences for us all, if we have a further rift in Europe, this will need to be avoided.

And all the powers of the federal governments will be going in that direction.

[04:35:00] I see good possibilities to cope with this. On the fifth day after the referendum today, we have much more clarity as to what needs to be done. We have the European council no now. During those deliberations and further on, we see and feel how decisive it is, but ask the 27 other member states show that we are capable and willing and that we take a level hate headed joint decision, the right decision.

All of us 27 states, the Euro countries and the non-Euro countries, the new and the old member states, everyone together.

Secondly, initially it's up to the United Kingdom itself to declare how it wishes to create a new relationship with the E.U. as David Cameron, the Prime Minister different than we had expected, wishes to leave it to his successor to determine the further process after the referendum. No doubt this is a domestic British decision, but there shouldn't be many misunderstanding at all as to the framework conditions from the European treaties that for this case. According to Article 50, Great Britain has the former obligation to notify the European council. Also it is exceed from the European, then the guidelines also the European council will be determined and after that negotiations can start not before, neither formally nor informally.

To conclude, very clearly we take note the fact that Great Britain does not want to notify as far Article 50. And Great Britain will have to understand that there will not be any pre-talk, informal or formal in their nature before this notification has formally been weight.

And I can only advise our British friends to be in no uncertainty as to the conditions for these decisions and the significance. So, once we have the notification as for Article 50, we have a two-year period for negotiations which can be extended, but only through a unanimous decision and then there will be at the end of it will be a decision on the conditions offer the exit of the European -- of Great Britain from the European Union.

Until then, membership remains in place and all the rules and obligations have to be respected for both sides.

Uncertainly, after the exit talks, the formal conditions are for the content of this exit of the United Kingdom will have to be decided. Great Britain, of course, has a great interest in having a positive atmosphere and these talks, but for Germany as well, it is very important to be united in friendship.

We have a lot of neighborly feeling, our citizens have a great amount of exchange, we have common values, and let us not forget that we are very close allies in NATO with Great Britain.

[04:40:05] And we have leadership responsibility for freedom, security and stability in Europe together with the United States been in that alliance.

We have to think about the -- so the bilateral relationships with the United Kingdom will continue since the end of the Second World War, and we will continue them in all friendship. But this does not mean that Germany and the Union will conduct negotiations with Great Britain on the basis of their own interests. For example, the negotiations with the future third country cannot be taken to put into question the achievement of the remaining 27 member states.

Of course, the German government also has to have an eye on Germany entrust German citizens living in the U.K. for example, many of them or some of them will be worried about their future. You can rely on it that we in Germany will work and do everything in our power to find good solutions for all the tasks and challenges ahead of us.

Therefore we will make sure that the negotiations are not played out according to the principle of cherry picking. There will be a tangible difference whether a country wants to be a member of the European Union or not. If you want to exit and leave this per family, then you cannot expect all the obligations to drop away but privileges to continue to exist.

If for example, you wish to have a free access to the European internal market, then you have to accept the European basic freedoms and all the other rules and obligations that applies to the United Kingdom as to everyone else.

Free access to the internal market is given to those who accept the full European freedoms. People got services and capital, Norway is not a member of the European Union but it has access to the internal market because it accepts free immigration from the European Union countries.

We shouldn't really debate whether we want more or less Europe. What we need is a successful Europe. A successful Europe is a Europe where citizens are included but they can identify with and that is felt in a positive way in their lives.

This is a task for the institutions of the European Union and for the member states in the same way. A successful Europe is a Europe that keeps it's adheres to treaties and promises. We didn't always achieve that. We had conclusions from the European council on the 23rd and 24th of September 2000 and Lisbon the union gave itself a new strategic goal for the next 10 years to make Europe to the most progressive and dynamic successful economic area with more work and greater social coherence. These were promises to the European citizens to create jobs and security.

[04:45:04] This was not kept because rules were not applied, because individual interests worked against the common good. But the promise wasn't wrong itself on the contrary, now we have to take a new push to make Europe more competitive to reduce the gap between the winners and the losers of globalizations. So we must not lose our connection to high-technology. We have to lay more efforts in innovation and research. And we have to integrate on youth unemployment especially.

Only then can we be successful in the long run with our economic and social model in Europe. And only then can we take further steps in the unification process. We have to have a historical awareness off the background of the decision of the European -- of the United Kingdom's people.

After hundreds of years of terrible bloodsheds, the founders of European unity found a way to unify the country towards peace manifested in the treaty of Rome. In Europe we feel the consequences of conflict and war in our immediate neighborhoods which cause so many people their lives and drove them from their home counties.

There are challenges in foreign and security policy that nobody will take away from us. And we have to be responsible for solving them. So, of course, the decision of the British people does have a great significance but we must not turn our attention for one second from the big problems in Iraq and elsewhere in the world.

We have the Turkish agreement, yes, but it hasn't been implemented yet, so we still have too many people, and it is shocking how many people are still victims of people traffickers all around the Mediterranean. We have the challenges of the migration, climate change and international terrorism. And that is why the security and defense policy of the European Union has to be put on a sound foundation together with our transatlantic partners. These challenges are too big for individual states to cope with on their own.

Ladies and gentlemen, Germany has a special interest in a successful unification of Europe. Germany with France bears a special responsibility to protect and honor the achievement of this unification. I, therefore, spoke to French President Francois Hollande and Matteo Renzi, the P.M. from Italy yesterday and we agreed to develop further the European Union. Today we can continue this discussion together with the other heads of state at the European council in Brussels together with the British Prime Minister David Cameron.

And then tomorrow amongst those 27 member states, who will remain in the European Union. So and also we have the 60th anniversary off signature of the treaty of Rome. And by then we want to have an agreement. We want to see that the European Union now takes the right consequences and conclusions from the exit of the United Kingdom. Concerning free travel, young people from -- with a university degree can study anywhere and other members did.

[04:50:11] So the Erasmus project makes possible the trouble of young people. Anybody can settle anywhere, we in Germany, we can buy Portuguese and Dutch products without any restrictions and our German products can be offered in Poland and in Italy. And we can be proud of our joined two European values, freedom, democracy and the role of law.

And we can be proud of our unique business model, which is the enemy of many in the world, and which we have to stand for in the global context. This will continue even without the membership of the United Kingdom. And past with all these challenges, we will work with all our power to that the E.U. is able to change as it always has been.

The European Union is strong enough to deal with the exit of the United Kingdom. It is strong enough to continue with 27 membership states and it is strong enough to represent the interest also its member countries. It is a unique value community of solidarity. And it is a guarantee a guarantor for peace prosperity and stability.

Thank you for the many voices from the German parliament which voiced the unique value of German -- of European Unity. Germany will always work towards this unity and especially during these difficult times and that this historical time of watershed.

Thank you.

(END VIDEO CLIP)

FOSTER: Angela Merkel speaking there. And the headline really from that is what we were expecting to hear. The Angela Merkel and Germany are insisting really the access to the free market for the United Kingdom will come with a condition that there is a freedom of movement of people throughout the union. And that is the same deal that Norway got and she's suggesting that that's the old terms if you cannot pick and choose which elements of the common market you're signing up to.

You have to have all about freedom and being the captives as well, and all sorts of things as well. Including financial services as well, also pointing out that there will be no pre-talks ahead of formal talks of any Brexit negotiations and they are formal or informal, indeed.

Now, as we mentioned earlier all of those upheavals of course, and all sorts of impacts. The European stocks are getting a bit of reprieve after seatbelt (ph) systems or referendum as far as industries are all higher today so far, a part of what spooked investors in the Brexit vote is the aftermath, the unique task execrating really the members states from the European Union.

Here to help walk us through what we can expect to see in the days and weeks ahead he is Mark Compton, he's a partner with global law firm Mayer Brown.

First of all, you're clients in the city here, they must extremely worried about what all of these means, what sort of questions are they asking of you? What are you been working all hours to try to give them some answers presumably.

MARK COMPTON, PARTNER, MAYER BROWN: Absolutely. I mean one of the things that's being mentioned all along is the uncertainty that this create, and the uncertainty will continue until we trigger the Article 50. Until we get a time line ...

FOSTER: If we do.

COMPTON: Absolutely, if we do and the uncertainty means the firms can't plan adequately ...

FOSTER: Yes.

COMPTON: Because there are number of different options that we could have, light them or we can model that's she mentioned ...

FOSTER: Yes.

COMPTON: And until you know which way we are going to go, it's an awful lot of money and an awful lot of expense for firms to deal with.

FOSTER: So, I can assume they're not investing anything here at the moment because of the uncertainty, but do you think there's a risk that companies will just go for the easy option, which is just, you know, makes Paris move to Dublin even (inaudible) I guess.

COMPTON: We have seen some announcements from some banks saying they are moving some people to the continent of France. And that is one option. But again, you don't need to move everything out of the U.K. And it could be that if we never leave or if we go for an E.A. Norwegian Model, you could carry on completely the same in the U.K. [04:55:11] FOSTER: Now, what does it mean if Britain does come out? Because financial services is by far the biggest industry in this country. How to those cross-border transactions work in the future? How much have been giving to that, and is it manageable? Would it be profitable for the companies?

COMPTON: So there could be a number of different things. Assuming we don't go for the Norwegian Model, the most recent types of E.U. financial services legislation have built in a quasi-passport. It is not the full thing it's limited in what it allows, but for certain types of transactions, as long as our legislation is still deem to be equivalent to the EU's and at the moment it's identical and we'll continue to be identical, then you could carry on quite gently some types of business cross-border from the U.K.

I'm over simplifying it but that's an option. Another option, depending on the banks or broker's model is you have what's effectively again low simplification of booking office on the continent and then you just bring the transaction back to the U.K.

FOSTER: So there are some issues you're working on that but you must be tracking (ph) all of them, you obviously may have been involved. Thank you very much again ...

COMPTON: Absolutely.

FOSTER: And you're working hard, right.

COMPTON: Thank you.

FOSTER: We know a lot trying to make sense of this.

I'm Max Foster in London, thank you for joining us.

For our viewers in the U.S. "Early Start". Up next, for everyone else Nina dos Santos continues our coverage after this short break.

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