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Britain's political paralysis worsened on Monday, as economic storm clouds continued to gather in the wake of last week's Brexit referendum vote.
On Monday the FTSE 100 losses since Thursday topped £100 billion ($179 billion), with banks taking the biggest hits, and the pound hit a 31-year low after recording a 30-year low on Friday.
In the early evening ratings agency Standard & Poor's downgraded Britain's credit rating a humiliating two notches, from triple-A to AA with a negative outlook.
S&P said the Brexit vote had hurt the "predictability, stability and effectiveness" of policymaking in the UK.
It was a stinging rebuff to the government on a day that began with chancellor George Osborne making a public statement intended to reassure business, the markets and the public that the country's economic fundamentals were strong.
And it was a reflection of the power vacuum at the heart of the British establishment.
"We take the view that the deep divisions both within the ruling Conservative Party and society as a whole over the European question may not heal quickly and may hamper government stability and complicate policymaking on economic and other matters," S&P said.
Prime minister David Cameron addressed parliament confirming his resignation, and pointedly leaving the big Brexit decisions to his successor and the government they form.
A new 'EU' unit of bureaucrats has been set up at Whitehall to address the huge and complex policy issues around Brexit, however "all key decisions wait for the arrival of a new prime minister," David Cameron said. It was for his successor and their cabinet to determine the kind of relationship the UK would have with the EU.
Project Farce
Angus Robertson, leader of the parliamentary Scottish National Party, said "Project Fear has turned to Project Farce" with the "lack of leadership from Whitehall unprecedented", asking for an assurance the government would take a firm grip on the situation.
But the man most likely to take Mr Cameron's place, Boris Johnson, was not even present in the House of Commons and only made a short statement to the media, claiming "Project Fear is over… the pound is stable, the markets are stable".
The FTSE 100 has lost about 2.5 per cent - since the referendum result – however it was lower than this in early June.
The FTSE 250, which has more companies that depend on the UK market, fell 7 per cent on Monday and 12 per cent since the referendum result, hitting its lowest level since 2014. However it is still up 30 per cent on its level in the global financial crisis.
Nominations for the new Conservative leader close this Thursday, and there will be a new leader by September 2 at the latest, a party committee announced on Monday.
If Mr Johnson gets on the list of the final two candidates chosen by the parliamentary party – which is likely – then the party members will probably elect him leader. A recent online survey by the Conservative Home site showed Brexit-leaning leadership candidates were favoured by 69 per cent of members.
The new leader is expected to call a general election to cement their mandate, before activating the Article 50 protocols that begin the formal Brexit process.
Labour divisions
Meanwhile the Labour opposition was tearing itself apart.
On Sunday and Monday, 23 out of Jeremy Corbyn's 31 shadow cabinet ministers quit or were dismissed, accusing their leader of contributing to Brexit by failing to clearly communicate the Remain message to Labour supporters.
His deputy Tom Watson warned him he had "no authority" left among his parliamentary colleagues.
Shadow business secretary Angela Eagle gave a tearful interview to the BBC in which she said half of Labour suporters had not known the party position on Brexit.
"We very possibly face a general election in the next four months and we can't have our party led by someone who can't get that kind of simple message across," she said.
She pleaded with Mr Corbyn to step down in the interests of the party. If he resists he may be hard to dislodge – on the most recent poll 72 per cent of Labour members thought he was doing well.
Jeremy Corbyn hit back at his MP colleagues in the House of Commons, saying the UK would "not thank either party for indulging in internal factional manoeuvering at this time"
He then addressed a rally of his supporters outside parliament, calling for a "unite culture" instead of a "blame culture".
But his colleagues voted to proceed with a vote of no confidence in his leadership.
Economic warning
On Monday other business and economist voices added to warnings about the country's economy.
"The situation that the UK now faces is in our judgement far more serious than is being recognised," John Llewellyn, former OECD senior economist and now an independent economics advisor, wrote on Monday in a newsletter to clients.
He predicted the UK was headed for recession as private sector spending slowed, layoffs in the financial services sector would "start in weeks", and support from abroad would be "strictly limited".
No political leader was currently able to take any serious policy initiative, he said.
"It will take a general election to restore the functioning of government… We are more worried – for the UK though importantly not for the world – than we were in 2008 or any other post-WWII crisis."
Racism surge
The country also faced another challenge on Monday: a surge in reports of racist incidents across the country.
BBC journalist Sima Kotecha tweeted Monday lunchtime she was "in utter shock: just been called p**I [Pakki] in my home town! Haven't heard that word here since the 80s".
The Muslim Council of Britain on Sunday collated details of 100 hate incidents since the referendum result – ranging from people being told to "go home", to much worse.
And the Islamic Human Rights Commission said since the referendum incidents of racism and Islamophobia had been on the rise.
"The 'leave' result has further legitimised the environment of hate we already exist in – we have already received many hate crime reports," they said. [You can see the screenshots of Tweets here].
Warsaw's embassy in the UK issued a statement saying it was "shocked and deeply concerned by the recent incidents of xenophobic abuse directed against the Polish community."
Cambridgeshire police are investigating hate literature reading "No more Polish vermin" that was posted through letterboxes of Polish residents, left on car windows and near a school.
And anti-immigrant graffiti was scrawled on the front doors of a Polish cultural centre in Hammersmith.
Reports to police online hate crime reporting site rose 57 per cent between Thursday and Sunday compared to corresponding days four weeks ago.
