Australia largely safe from Brexit fall-out: report
Last month’s Brexit vote is expected to have only a limited impact on the Australian economy, a new report by peak financial regulators has found.
Some negative short and medium-term impacts are expected for the British economy as it leaves the European Union but Australia is considered well-placed to manage any fall-out on world financial markets and has only limited exposure to risk through the banking sector.
Treasurer Scott Morrison released the Council of Financial Regulators report on Thursday. Photo: Alex Ellinghausen
Treasurer Scott Morrison released the report by the Council of Financial Regulators in Sydney on Thursday, ahead of an expected meeting with the new British Chancellor of the Exchequer, Philip Hammond, at this weekend’s G20 finance ministers summit in China.
The council, which includes the Reserve Bank, Treasury, the Australian Prudential Regulation Authority and Australian Securities and Investments Commission, was tasked with preparing a brief for the incoming government after the July 2 election.
The report warns other countries following Britain out of the 28-member bloc would increase the risk, but Australia was better placed than other countries as trade is directed more at Asia and Europe.
Mr Morrison said there was “no required action” from the Australian government as a result of the historic vote.
“Obviously there is still now a long way to go in terms of how the United Kingdom and the union work through their disengagement process,” he said.
“I think it’s still very early in the piece to understand the full impact of what that will mean for each of those economies.
“From Australia’s perspective, we maintain excellent and outstanding relationships right across Europe and in the UK.
“Our exposures are limited and what is pleasing in the report that we have received and released today is that the settings, the systems have all functioned very well and have ensured what has been a somewhat significant event, politically as well as economically, has been able to be absorbed within this system.”
The longer-term impact for Australia is likely to be determined by the way Britain handles the exit process and how it engage with other nations.
Possible models for Britain considered by the report include a Norway-type arrangement with more access to the single market, through to bilateral arrangements and World Trade Organisation systems.
Mr Morrison said significant post-Brexit concerns remained for other countries, particularly Northern Hemisphere economies.