Brussels: European leaders have told Britain to act quickly to resolve the political and economic confusion unleashed by its vote to leave the European Union last week, after the IMF said the uncertainty could put pressure on global economic growth.

Sterling and world stock markets recovered slightly on Tuesday but investor confidence remains fragile despite policymakers saying they will take all necessary measures to protect their economies.

Last week's referendum wiped a record $US3 trillion off the value of global shares and sterling fell to its lowest level in 31 years against the US dollar.

German Chancellor Angela Merkel in Berlin on Tuesday. Photo: Getty Images

British Finance Minister George Osborne, whose attempt to calm markets on Monday went unheard, said on Tuesday the government would have to cut spending and raise taxes to stabilise the economy after credit rating agency Fitch became the third agency to downgrade UK debt.

Businesses have announced hiring freezes and possible job cuts, despite voters' hopes the economy would thrive outside the EU.

Germany's financial market regulator delivered a double blow to the City of London, saying it could not host the headquarters of a planned European stock exchange after Britain leaves the EU and could not remain a centre for trading in euros.

Protesters gather against the EU referendum result in Trafalgar Square on Tuesday. Photo: Getty Images

European countries are concerned about the impact of the political and regulatory uncertainty on the economies of the other 27 other EU members while the UK government works out how and when to begin withdrawal negotiations under Article 50 of the Lisbon Treaty.

European Central Bank President Mario Draghi said on Tuesday that central banks around the world should aim to align monetary policies to mitigate "destabilising spillovers" between economies.

At a summit meeting of the leaders of the 28 members of the EU in Brussels on Tuesday, British prime minister David Cameron said he hoped the UK would maintain as tight an economic and political relationship as possible with the EU.

European Council President Donald Tusk at an EU summit in Brussels on Tuesday. Photo: AP

"Britain will be leaving the European Union but we will not be turning our back on Europe," he told a news conference after a dinner at which he said many European partners expressed regret and voiced friendship for Britain.

Mr Cameron said he told the EU summit that "People recognised the economic case for staying, but there was a very great concern about movement of people and that was coupled with concern about issues of sovereignty. I think we need to think about that, Europe needs to think about that."

In a veiled rebuke to British "Leave" campaign leaders such as Boris Johnson, who is vying to succeed him, Mr Cameron said Britons would have to understand they could not keep all the benefits of EU membership without the costs.

Britons furious about the Brexit vote gather in London to protest on Tuesday. Photo: Getty Images

Driving home that message, French President Francois Hollande said continued access to the EU's prized single market was dependent on accepting the so-called four freedoms of movement of goods, capital, workers and services.

"If they don't want free movement, they won't have access to the single market," he said, adding that the City of London would no longer be able to act as a clearing house in euros.

The European Parliament adopted a non-binding resolution on Tuesday demanding that London activate the EU treaty's voluntary exit clause as fast as possible and launch negotiations on withdrawal terms with a two-year countdown to departure.

British Prime Minister at an EU summit in Brussels on Tuesday. Photo: AP

But German Chancellor Angela Merkel said London should be allowed time to recover its balance after the political shockwave before formally notifying its partners of its plans.

The other 27 EU leaders will hold their own meeting on Wednesday to discuss how to deal with Britain on its way out of the bloc it joined in 1973, and how to take the Union forward without it.

Back in London, Conservative Party officials said on Tuesday that Mr Cameron's successor as prime minister would be appointed at the earliest on September 9.

A British protester waves an EU flag in front of the Houses of Parliament in London on Tuesday. Photo: Getty Images

Mr Cameron, who called the referendum and tendered his resignation as prime minister when it became clear he had failed to persuade Britain to stay in the EU, says he will let his successor declare the country's exit formally.

He said he was sorry that he had lost Britain's referendum on membership of the European Union but would work with his successor to make sure the country has the closest ties possible with the bloc.

"I wish I had won the referendum ... I am sad about that," he said.

Pro-EU protesters in London on Tuesday. Photo: Getty Images

"But I am more concerned about Britain getting its relationship right with Europe," he said, adding he would do everything in his power to "encourage a close relationship".

Meanwhile, UK Labour Party lawmakers passed a vote of no-confidence in leader Jeremy Corbyn on Tuesday, accusing him of failing to win over traditional supporters during the referendum campaign. The lawmakers fear a similar failure at the next general election, due in 2020, will lead to Labour suffering a major loss of seats in parliament.

However, the Labour confidence vote does not automatically trigger a leadership election and Mr Corbyn refused to quit. "I was democratically elected leader of our party for a new kind of politics by 60 percent of Labour members and supporters, and I will not betray them by resigning," he said.

Underlining the political upheaval that the Brexit vote set in motion, Scottish First Minister Nicola Sturgeon is to visit Brussels on Wednesday for talks with the president of the European Parliament and European Commission officials.

Ms Sturgeon has said Scotland, where nearly two in three voters backed staying in the EU, does not want to leave the bloc and may hold a new referendum on independence.

Reuters