Brexit Could Make Your London Holiday More Expensive
The Brexit process might bring down the British PM, but what does Britain leaving the EU mean for Australia?
The Brexit deal lies in tatters, with British parliament comprehensively rejecting Prime Minister Theresa May's plan for the country to extricate itself from the European Union.
Nearly 120 members of the PM's own party rubbished her proposal, meaning May now faces a vote of no confidence, and her country faces the prospect of quitting the 'single market' without a solid transition plan in place.
But while the deal itself is far from done, the ticking clock to the mandatory quitting time -- March 29, with or without a deal -- means governments and citizens worldwide are turning their attention to what Brexit means for their country and themselves.
Economists and trade experts told 10 daily the impact of Brexit on Australia was currently unclear, with authorities still unsure about how economic divorce from the EU would impact Britain itself, let alone any international trade agreements the country has with other nations.
Most believe Australia will escape with minimal impact, considering the special relationship -- political, historical, cultural, economic -- it shares with the UK. But there have been speculations that it could lead to some negative impacts on tourists, especially.
" I wouldn't hold back in buying a plane ticket hoping it will be cheaper," Benedikt Heid, a senior lecturer in economics at the University of Adelaide, told 10 daily.
"Prices could even go up. I wouldn't expect flights become cheaper."
Heid explained that due to changes in security controls and immigration due to Britain leaving the EU, or the possibility of Britain levelling higher airline taxes, airlines may choose to fly fewer flights to the country. That could see prices of plane tickets rise.
Heid also said Britain, freed from the economic guidelines of the EU, could raise or lower tariffs on goods -- which, depending on the outcome, could make it easier or harder for overseas firms, such as from Australia, to do business in Britain.
"The UK is free to charge whatever import tariff it wants," he said.
Trade numbers from our Department of Foreign Affairs and Trade tell a picture of how important Britain is to Australia's bottom line.
The United Kingdom is Australia's ninth-biggest export market, accounting for $11.6 billion in trade in 2017 -- just three percent of the total, far behind China (30 percent), Japan (12.2 percent) and Korea (six percent). The UK is also Australia's sixth-biggest import source, with $15.1 billion in 2017, but again just four percent of the total, behind China (17.9 percent), the United States (12.6 percent) and Korea (8.5 percent).
The European Union, on the other hand, accounted for $29.1 billion and 7.5 percent of our total exports in 2017, which would make it our third-biggest export market. The trading bloc also was responsible for $71.6 billion in imports in 2017, or 19 percent, making it our biggest import source.
Some have spoken about the potential for Australia to negotiate a more favourable trade agreement with Britain. But for these numbers alone, experts said it made more sense for Australia to prioritise an agreement with the EU -- with negotiations for such an agreement being launched in mid-2018, and still in train.
"Long term, our relationship with the EU may matter more, given its size and significance. Australia’s priority is its agreement with the EU," Matthew Rimmer, a professor of intellectual property and innovation law at the Queensland University of Technology, told 10 daily.
Emma Shortis, of the RMIT European Union centre, said Britain may seek to strengthen ties with old allies in the wake of Brexit.
"There could be a warming of ties with Australia, to deepen that effort. We've always had special treatment for things like visas, I don't see any reason that wouldn't continue," she told 10 daily.
"But it could make things like travelling on holiday, especially between Britain and the EU, not more difficult but more annoying, with more security. Britain has had an arrangement with borders with the EU, which could get more complicated. "
This hasn't happened before, no country has left the EU, so nobody knows how it will play out.
Former Australian PM Tony Abbott, born in England, doesn't seem too concerned though.
Rimmer said some have floated the idea of Britain joining the Trans-Pacific Partnership, of which Australia is a member, as a replacement for the EU.
Rimmer called this idea "strange", to leave one international agreement only to join another, but said Brexit may present opportunities for Australian businesses to export to Britain and replace goods or services previously supplied by EU nations.
"There will perhaps be some new opportunities for Australia to trade things to the UK for things it previously relied on the EU for," he said.
"Australia are especially concerned about protections to agriculture, immigration of people. Whether any special deal is done for Australia and UK for travel is an interesting question."
Heid also said Australia may have an opportunity to negotiate a favourable trade deal with Britain, one that is more generous than what may be finalised with the EU.
Because the United Kingdom has a population of 66 million, compared to the European Union population of over 500 million people, Britain enters negotiations at a weakened position -- although, admittedly, stronger than Australia at 25 million -- that could let Australia hammer out better terms.
"But the more tricky question is, the moment the UK leaves EU in March, it is free to come up with its own trade policy. But we don't know what that policy is. From an exporter perspective, what tariffs Australian firms are going to face, it’s not clear," Heid said.
"Presumably the UK wouldn't want to hurt its trade with other countries, especially Australia with our special relationship, but we don't know."