Opinion – Brexit:  What does it mean for New Zealand?

Despite the vote in favour of Britain exiting the European Community (EU), I think the jury is still out on whether Brexit will actually occur or not.  There are still powerful opponents, and of course the Scots have threatened to leave Great Britain altogether and stay in Europe if Brexit goes ahead.  Although whether they would actually be welcomed by the European Community (EC) is an open question.  Scotland survives economically on huge subsidies from the UK and they would have to be somehow replaced.

On the other side the British Prime Minister Therese May, is a very determined politician in the Margaret Thatcher mould and is committed to seeing Brexit through.  The first test will come next February when in theory the British have to formally trigger the Brexit process.

So what would it mean for New Zealand if Brexit went ahead?  As usual this would present a range of opportunities and risks and it would be a case of deciding where the balance lay – bearing in  mind that although we might be able to influence the outcomes we would be very much in the hands of other countries.

Looking at the European Union first, the key question is how Brexit would impact on our exports to Europe and on negotiations for a Free Trade agreement.  I doubt if exports would change too much as export demand is primarily about consumers rather than governments.  This applies to both exports to the EU and exports from the EU to New Zealand, e.g. don’t expect to see a big reduction in the number of European cars on the roads.

A Free Trade agreement might be more problematical.  My bet would be that the EU will become more protectionist and look inward for a while to cure its own problems from Brexit.  Those problems could be acute if other countries show signs of following the British lead.

Britain post-Brexit is a lot harder to figure out.  The general feeling in Britain is that the negative economic consequences of Brexit were overplayed by the opponents and the British economy will still be in good shape.  The British will also be very keen to expand their own exports, partly to make up for Brexit and to demonstrate to the rest of the world that it had not been affected.  Will this mean a return to old Commonwealth ties?  I very much doubt it.   Britain post-Brexit will be very much driven by self-interest and will trade and do deals  where it sees an advantage in doing so.

The economic conundrum is whether Britain will become more protectionist toward imports in order to boost its own internal output.  Meat might be a concern for New Zealand  but exports like wine and fruit should be fine. That in turn will determine whether Britain shows an appetite for contemplating Free Trade agreements with countries such as New Zealand, and if they do how New Zealand would stand in the queue compared with larger countries and particularly the EU itself.  I would imagine that a priority for Britain would be to preserve and even extend trade links with the EU because it is its largest and closest market.

There is finally the question of immigration.  It is crystal clear that Britain will be reducing   immigration because that was one of the drivers for the Brexit decision.  It also seems likely from statements that have already been made that New Zealand will not be seen as any sort of special case.  So young people thinking of living and working in the UK while they do their big OE might have to think again or be prepared to jump much larger hurdles than in the past.

The other interesting side of this – which we are already seeing – is an increasing appetite for Brits to emigrate to New Zealand because they see that as giving them a more certain future.

On balance I think Brexit will in initially make life harder for New Zealand.  The challenge will be to find ways of counterbalancing the negatives with new ideas and initiatives.

We shall see!

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This is another of Bas Walker’s posts on GrownUps.  Please look out for his articles, containing his Beachside Ponderings.