The Commonwealth countries can’t move physically closer to the UK after Brexit! Australians might still find it preferable (and far more practical) to develop trade with Asian countries nearer to its time zone.
To generalise slightly, the Leave camp tends to prefer immigration from Australia, New Zealand and Canada rather than Poland and Romania. But I guess the numbers from these countries would be relatively small.
And they could accept immigration of skilled workers or the wealthy from the rest of the Commonwealth, or from anywhere for that matter. But this is not a change from the current status.
Perhaps the most positive impact is that ambitious Britons are more likely to emigrate to Commonwealth countries than the EU, for international experience.
It would be good to get other views on this!
In the short-term, Brexit would lead to turmoil in the UK and global financial markets. In the worst-case scenario it may precipitate another financial crisis.
With a debt mountain piling up in China even as growth slows, and the developed world struggling to generate growth despite record-low interest rates, the global economy is fragile. Last week, the US Federal Reserve cited the uncertainty around Brexit as one reason for leaving interest rates unchanged.
The effect will be most keenly felt in the foreign exchange market. The trade-weighted-index for the British pound has depreciated by 6.5% this year, and currently appears to be moving in step with Brexit polling. US investor George Soros, who famously “broke” the Bank of England during the 1992 European Exchange Rate Mechanism “Black Wednesday” crisis, suggests Brexit would cause a Sterling devaluation of at least 15%.
Consequences for Australia
As they are closely linked, turmoil on offshore markets will likely have a large impact on Australian markets. Australian stock markets and the Australian dollar tend to decline sharply as uncertainty increases and investors adopt a “risk-off” mentality. Bond yields will also head even lower as investors engage in a “flight to quality”.
If financial markets seize up, as they did in 2008, then the big Australian banks will find it difficult to secure the vast amounts of offshore funding that they require – share prices will fall sharply and government guarantees will be called for again. The one bright spot could be the stock price of gold mining firms if gold surges as a result of its “safe haven” status as it did in 2008.
A fall in the pound would have negative consequences for the many Australians (such as myself) who have pensions and other assets in the UK. And the spending power of British tourists (last year more than 700,000 of them arrived in Australia) would be lowered.
In the longer term, it is likely that a shaky global economy will severely impact Australia’s trade. Exports have been a key driver of recent GDP growth and so this could have severe ramifications for employment and economic growth. Recall that commodity prices sank quickly in 2008, and also that the UK is still Australia’s 7th largest trade partner.
As with the majority of governments, the lack of desire in promoting structural change, means that Australia’s fiscal position provides little comfort in the ability to stimulate growth. A repeat of 2008-09 when Australia avoided recession is unlikely to be avoided.
This article originally appeared in THECONVERSATION