The United Kingdom might be almost 17,000 kilometres away, but the effects of its departure from the European Union are having a global impact. So what does this mean for Australian businesses? And is Brexit really as bad as the press makes out?
For the majority, Brexit is a blip on the radar. Especially for those from outside of the European Union. But what exactly is it all about? And what is the future of the independent United Kingdom with Australia? Here’s a summary of the Brexit latest news.
What Exactly is Brexit?
Brexit is the joining of the two words ‘Britain’ and ‘exit’. In its most simple explanation, Brexit is a big old divorce between the United Kingdom and the European Union.
On the 23rd June, 2016 the people of the U.K voted in a referendum consisting of two questions. Do you want to remain in the EU? or do you want to leave? Almost 44 million people took part (65.38% of the voting population), with 51.9% of those who voted in favour of withdrawing from the European Union.
In total, nearly 17 and a half million people voted leave while just over 16 million voted to remain. While a difference of over 1 million is significant, it has divided an already troubled nation even further.
On the 29th of March, 2019 the United Kingdom will officially break away from the European Union. The U.K and the EU are still trying to work out the deal for when the cut-off date arrives. If a deal is ratified, there will be a transition period of 2 years where everything remains the same while trade deals are put in place. If no deal is reached, the official cut-off date is the 29th March, 2019 and a potentially acrimonious situation may unfold.
It is important to note that Brexit does not mean the U.K is no longer a part of Europe. That is geographically impossible. What it does mean is that the U.K will no longer be a part of the European Union. Freedom of movement, U.K-Euro free trade and European law as it is today will come to an end in the U.K. So what changes will this have on Australians wanting to visit or do business in the U.K?
As Australians are classified as third-country nationals of low risk, a visa is typically not required for visits of less than 6 months. And this will remain the same after Brexit. Many third country nationals need a visa to enter the U.K, such as the majority of African, Asian, Russian and South American citizens.
For now, EU citizens have freedom of movement. This allows a citizen from an EU country to move to another EU country without a visa and set up their lives there. Once Brexit becomes official, all citizens of EU countries will also be classified as third-country nationals. While it is unlikely visas will be introduced for those visiting the U.K, it is a real possibility. EU citizens will no longer be able to emigrate to the U.K and live and work freely as they do today, and British citizens will no longer be able to set up life in Europe without restrictions.
Will Brexit Really Happen?
There are many people and politicians campaigning for a second referendum calling it the “People’s Vote.” Should a second vote be put into action, there is a very real risk that the United Kingdom will self-implode. Scotland could call for another vote for Scottish independence, and already sharp divisions between the people will widen.
Naturally, the EU is not going to make things easy as it fears a favourable outcome for the U.K would encourage other countries to make the break too. While a deal is on the table, many pro-leavers feel a no-deal outcome is what they voted for. However, for pro-EU voters, holding onto some form of relationship with the EU is prefered than a clean cut.
But will Brexit really happen? The government is running the deal-agreement timer down to the last minute, causing concern for many. If no deal is agreed upon, the government can claim it is in the country’s interest to stop Brexit. For now, it appears to be going ahead. But in the confusing world of politics, this could change overnight.
UK-Australian Business Post-Brexit
While it is easy to assume Brexit has no direct effect on Australian businesses, this is not true. And it’s not all doom and gloom. A post-EU Britain may prove to be extremely beneficial to Australia and New Zealand. As EU trade restrictions are lifted from the U.K on the 30th March 2019 if no deal is agreed upon and the World Trade Agreement comes into effect.
Trade talks between Australia and the U.K have made it clear that in the event of a no-deal Brexit, a huge free-trade agreement could be implemented on the 30th of March, 2019. A separate trade deal between Australia and the EU is also currently being discussed.
If you are an Australian business who currently performs trade with the U.K and the EU, you should be looking at any potential supply chain interruptions. This is especially true if you import or export directly from the U.K to the EU or vice versa. If the U.K leaves the EU without a deal in place, current trade arrangements will cease to be valid. Therefore, it is a good idea to have a plan of action in place to deal with the U.K and Europe as two separate entities rather than a singular one.
For Australians who want to work in the U.K, you could benefit from the proposed relaxing of visa requirements for Australians once the U.K retakes control over its immigration and borders. Currently, the U.K has a system that only issues work visas to highly-skilled individuals from third countries, while visas for any skill level must be issued to EU nationals. This is due to be replaced with a single system for all countries, while the educational requirements are relaxed with a high-school certificate being sufficient.
If you have a website that sells services or products to the U.K, there will be no changes to your business. As a business operator outside of the European Union, the changes to U.K – EU trade will have little direct impact on you, if any. If a trade deal is not reached between the U.K and the EU, British citizens could face huge price increases when purchasing and importing products into the country from the EU. This could potentially see Australian and other world-wide products begin to soar in popularity as people look elsewhere.
Don’t worry, we all are. Here’s a visual to help you see what it’s all about. Whether you feel Brexit is right or wrong, clearly many underlying causes contributed to it happening and there are lessons to be learned from both sides of the argument.