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Chancellor George Osborne's bid to ease concerns fail as sterling and FTSE plunge

Chancellor George Osborne after a press conference at The Treasury, London, where he moved to try to calm market turmoil triggered by the pro-Brexit vote. Picture by Stefan Rousseau, Press Association
Chancellor George Osborne after a press conference at The Treasury, London, where he moved to try to calm market turmoil triggered by the pro-Brexit vote. Picture by Stefan Rousseau, Press Association Chancellor George Osborne after a press conference at The Treasury, London, where he moved to try to calm market turmoil triggered by the pro-Brexit vote. Picture by Stefan Rousseau, Press Association

CHANCELLOR George Osborne's efforts to ease Brexit concerns were "shattered" after global markets plunged into the red and more than £40 billion was wiped off the value of Britain's biggest companies.

The FTSE 100 Index plunged below the 6,000 mark, slipping 2.6 per cent to 5,982.2, despite Mr Osborne briefly stemming losses on the London market when he offered assurances that the UK is "about as strong as it could be to confront the challenge" of leaving the EU.

However, his comments were not enough to dampen fears on global financial markets, with Germany's Dax plummeting 3per cent and the Cac 40 in France plunging 2.9 per cent.

Across the Atlantic, the Dow Jones Industrial Average was also trading 1.4 per cent lower.

On the currency markets, sterling plunged to a fresh 31-year low of US$1.3151, before rallying back to a 3.4 per cent fall to US$1.321. Yields on 10-year government bonds also slid below one per cent for the first time.

In his statement, Mr Osborne said he had held talks over the weekend with Bank of England Governor Mark Carney as well as fellow finance ministers and international economic organisations and that "further well-thought through contingency plans" were in place if needed.

"It will not be plain sailing in the days ahead. But let me be clear – you should not underestimate our resolve," he said.

"We were prepared for the unexpected and we are equipped for whatever happens. And we are determined that, unlike eight years ago, our financial system will help our country deal with any shocks and dampen them, not contribute to those shocks or make them worse."

The assurances did not stop fresh warning from business about the likely consequences of last week's momentous vote to withdraw from the EU.

Estate agent Foxtons issued a profit warning and said that the upturn it had expected in the second half of the year is "now unlikely to materialise", adding that annual earnings will be "significantly lower" than in 2015.

The budget airline easyJet also pointed to a host of events that will see it take a £28 million hit following two months of turbulence, adding that Brexit would also have a negative impact on the airline.

Joe Rundle, head of trading at ETX Capital, said: "Whatever bounce Osborne delivered, it's gone now as markets are getting slammed again. Today's US open shattered the peace. Wall Street opened sharply lower, with all 30 Dow stocks in the red.

Mr Osborne said that Article 50 of the Lisbon Treaty, which sets in train the two-year process of negotiating withdrawal from the EU, should not be invoked until a new prime minister has set out "a clear view about what new arrangements we are seeking with our European partners", effectively delaying talks until October at the earliest.

He made clear he expects to remain as Chancellor during that time, but gave no indication of whether he will run as a candidate to succeed Mr Cameron, saying that he would address questions about his role in the future of the Conservative Party in the coming days.

Despite accusations by Brexit supporters of scaremongering during the referendum campaign, Mr Osborne insisted he was not backing away from the warnings that there could be a £36 billion black hole in the public finances by 2030.

He said that volatility in the markets, which saw the pound fall to 30-year lows in the immediate aftermath of the referendum on Friday, was "likely to continue".

"It is already evident that, as a result of Thursday's decision, some firms are continuing to pause their decisions to invest or to hire people," he said.

"As I said before the referendum, this will have an impact on the economy and the public finances and there will need to be action to address that.

However, he added: "But no-one should doubt our resolve to maintain the fiscal stability we have delivered for this country.

"To all companies large and small I would say this: the British economy is fundamentally strong, we are highly competitive and we are open for business."