It is just over two weeks since the EU referendum and some of the consequences are becoming clearer.
The two remaining candidates for the leadership of the Conservative Party agree that the UK will leave the EU. The difference at this stage is one of timing. Frontrunner Theresa May sees no need to start the formal process of leaving immediately by triggering Article 50. Andrea Leadsom says she would invoke Article 50 immediately if she became Prime Minister.
The government has rejected an online petition, signed by more than 4.1 million people, calling for a second EU referendum. In its response to the petition the government said it had "been clear that this was a once-in-a-generation vote" and that "we must now prepare for the process to exit the EU".
The economic effects of the vote are starting to filter through. UK consumer confidence has fallen sharply since 24th June. Economists on average expect UK growth to slow to just 0.4% in 2017, against a pre-referendum forecast of 2.1%.
The pound is down 13% against the dollar and shares in many UK-facing companies have declined with banks and real estate businesses suffering some of the largest losses. The first real evidence of financial stress has also come through. A rush of investors trying to get their money back from open ended real estate funds has forced a number to impose limits on redemptions. Underlying the stampede is a concern that Brexit will knock foreign demand for UK real estate; in the first quarter overseas inflows into UK property almost halved.
Financial markets believe that Brexit means that interest rates will stay lower for longer in the UK and elsewhere. Interest rates or yields on government bonds have fallen to new all-time lows. Despite the downgrade to the UK's credit rating in the aftermath of the vote UK government bonds have soared in value. Investors are paying the Swiss government to lend it money on the basis that in an uncertain world the Swiss government will give you your money back.
But this doesn't look like a Lehman-style moment. Financial markets have so far remained stable and orderly. The FTSE250 index of UK-focussed middle sized companies is down by just under 7% from its pre-referendum levels; a sizeable decline, but far less than the sell-off seen in January and February that was driven by concerns about global growth. Meanwhile government and business borrowing costs have fallen and a weaker pound has provided a boost for exporters and businesses that earn revenues overseas.
The response of the UK authorities to the Brexit vote has turned some of the old rules on their head. Before the referendum Chancellor, George Osborne, warned that a Brexit vote would require tax rises and cuts in public spending to keep deficit reduction on track. In the event Mr Osborne has jettisoned his target of eliminating the public sector deficit by 2020.
Meanwhile the Business Secretary, Sajid Javid, in a short-lived campaign to be Chancellor alongside Stephen Crabb as Prime Minister, proposed £100 billion of extra borrowing to finance public sector infrastructure. It is a sign of the time that a proposal that runs a coach and horses through the Chancellor's deficit reduction could be aired by a senior member of the Cabinet. The idea is unlikely to come to anything, but it points to a willingness to contemplate radical measures to sustain growth.
The Bank of England's main concern has been to ensure that the Brexit vote does not trigger another financial crisis. The Bank has provided extra liquidity to the banking system and last week reduced the levels of capital banks are required to hold against lending, freeing up to £150 billion of extra lending to the private sector. Eight major banks have also agreed with George Osborne to provide more lending to households and businesses in this "challenging time".
Interest rates in Europe are almost certain to fall yet further. Financial markets are pricing a probability of almost 90% that the Bank of England will cut UK interest rates and an 80% probability that the European Central Bank will cut euro area rates. The Bank of England may well restart its programme of Quantitative Easing, or money printing, to lend additional support to the economy.
After the initial shock of the vote the government seems to be trying to get onto the front foot. It has signalled that the UK will not wait for a settlement with the EU before opening discussions about trade with other countries. Last Thursday the Business Secretary met Indian Ministers "to outline his vision for what a future trade relationship between the UK and India might look like outside the EU". Mr Javid plans a series of similar, exploratory talks with other major trading partners in coming months. In a similar vein Mr Osborne has sought to project a sense of direction. Last week he told the Financial Times he wanted to build a "super competitive economy" with a global focus and that he planned to reduce the Corporation Tax rate from 20% to 15%.
The media seem to find it hard to worry about more than one thing at a time. But for all the fireworks in the UK events are moving on in Europe too.
The UK referendum has increased the risk of weaker growth and lower interest rates in the euro area. This, in turn, has led to further sharp declines in the value of heavily indebted Italian banks. The banks urgently need new capital, but EU anti-subsidy rules make it difficult for the Italian government to provide it. The alternative, which the government is desperate to avoid, is having millions of ordinary households who own bank debt and shares contribute in a so-called "bail in". The economics of doing so are bad, the politics worse. Prime Minister Matteo Renzi's Democratic party has been overtaken in the polls by the populist Five Star Movement and faces a make or break referendum on constitutional reform in October.
The Italian government and the EU may be able to come up with a deal which provides the banks with capital without hitting ordinary shareholders. In the meantime the state of Italy's banks and the risks of a renewed financial crisis in the euro area are giving policymakers in Europe sleepless nights.
Another issue to watch are the negotiations between Switzerland and the EU over EU immigration. Following a referendum decision in 2014 to impose controls on EU migration Switzerland has been trying to secure limits on free movement while maintaining its access to the EU's Single Market. With no deal in sight and immigration controls due to be implemented by February 2017, the third anniversary of the referendum, the pressure for a deal is mounting.
Were it not for Brexit the UK media would probably have paid more attention to this weekend's NATO summit. In a significant development the alliance agreed to position 4,000 troops in Poland and the Baltic States. The fact that the UK has voted to leave the EU should not directly affect Britain's membership of NATO; the UK was a member of NATO before it joined the EU and several non EU member states including Norway and Turkey, are members of NATO. Nonetheless, in the light of the vote and at a time of heightened tension with Russia the decision to station troops close to the border with Russia looks designed to signal the alliance's resolve.
A Brexit would spell one of the greatest changes in UK economic and political policy since 1945. It would be a long process. But already some of the responses and consequences are becoming clear.
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