LONDON (Reuters) - Britain will need to raise taxes and cut spending later this year to stabilize the public finances after last week’s shock vote to leave the European Union, finance minister George Osborne said on Tuesday.

Britain's Chancellor of the Exchequer George Osborne leaves number 11 Downing Street in London, Britain March 22, 2016. REUTERS/Eddie Keogh

Osborne said Britain would be poorer due to the public’s decision to leave the EU, which he had campaigned against, and that the country now needed to deal with the economic consequences, as well as to tackle new social divisions.

Sterling plunged against the dollar to its lowest since 1985 after the vote, and two ratings agencies downgraded Britain’s sovereign credit rating late on Monday.

“We need a plan as a country to get ourselves out of this, whilst respecting the verdict of the British people. That means financial stability, ending economic uncertainty and providing unity in our society,” Osborne said in a BBC radio interview.

British police say there has been a spike in racist incidents since the June 23 vote.

Hours earlier Osborne had ruled out standing to succeed Prime Minister David Cameron, who said on Friday he would make way for a new leader of the Conservative Party after coming out on the losing side of a referendum he had called.

Osborne refused to be drawn on whether he had advised Cameron against the referendum, and said he himself was the wrong person to unify the Conservative Party, though another supporter of EU membership possibly could.

“I am not backing any candidate at the moment. I was full-throttled in arguing for remaining in the EU and because half my party wanted to leave the EU I don’t think I can be the person who can bring the party back together at this moment.”

Osborne said the leadership contest would allow the party to decide how close Britain should stay to the EU.

“The candidate who is able now to articulate, in my view, the clearest, crispest version of what relationship we are seeking, which in my view involves the best possible terms of trade for services and goods, is the candidate I think who can lead the country,” Osborne said.

Before the referendum Osborne said Britain would need an emergency budget to impose extra austerity if the country voted to leave the EU, but on Monday he said this would have to wait until Conservative party members elected a new leader.

On Tuesday, when asked if new budget measures would involve tax rises and spending cuts, Osborne said “Yes, absolutely.”

“We are adjusting to life outside the EU and it will not be as economically rosy as life inside the EU,” he said.