Australia: The Brexit vote: Potential implications for Australian businesses

This month's referendum on the United Kingdom's membership to the European Union – and the prospect it raises of a British exit (or "Brexit") from the EU – has understandably attracted much attention worldwide. Although the vote will take place half a world away from Australia, its effects are likely to be felt everywhere, including by Australian businesses that operate in the UK.

At this stage, we don't know whether a Brexit will even happen, let alone how a UK withdrawal from the EU will work or what a post-Brexit UK will look like. (The British government itself has acknowledged that such a scenario is unprecedented.)

But what we can do is start thinking about what could happen if it does...

This article discusses some of the potential implications for Australian businesses should a Brexit become a reality after the referendum on 23 June 2016.

COULD WE SEE A BRITISH TURN TO AUSTRALIA AND THE ASIA-PACIFIC?

One possible outcome of a Brexit is that UK access to European markets could be curtailed, or alternatively, the terms of the UK's access to them could become less favourable. If so, Britain may, out of necessity, start to look towards other markets – in particular the Asia-Pacific region, which continues to be a driver of global economic growth.

If this turns out to be the case, the UK's existing ties – historical, cultural and legal – with Commonwealth countries (in particular Australia) might make them favoured for British outbound foreign investment, both of themselves and as 'familiar' places from which to launch new Asian ventures.

The UK is already the second largest source of foreign direct investment into Australia, and Corrs' market-leading public M&A deal reviews consistently show that UK companies are among the leading purchasers of significant Australian businesses.

A Brexit could, perhaps, bring even more UK interest in Australia.

On the other side of the ledger, if the UK's obligations to extend 'most favoured nation' status to European countries fall away, Britain could have the opportunity to extend more favourable access to both Australian individuals and businesses.

At the same time, if a Brexit results in trade ties and freedom of movement laws between the UK and Europe being severed, there could be opportunities for Australia to attract EU external investment and trade. In the tertiary education sector, for example, Australia might be able to attract a share of some of the 125,000 European students currently studying at British universities.

But while possible, such positive outcomes of a Brexit in reality appear to be unlikely.

As Martin Wolf of the Financial Times has observed, Britain is by reason of geography necessarily a part of Europe (if not the EU), and is always likely to look across the Channel first for trade and investment.

Even if Britain does turn its attention elsewhere, there is little reason to expect that Australia would be its preferred port of call, or that the UK-Australia Trade Agreement suspended over 40 years ago would suddenly spring back to life. Also, there is no clear evidence to suggest that EU nations would suddenly become more interested in doing business with Australia after a Brexit.

THE POTENTIAL COSTS AND CONSEQUENCES OF A BREXIT

While it may create some opportunities, a Brexit seems likely to present more downside risks than upside prospects – including for Australian companies.

From an Australian perspective, the most significant impact is likely to be felt by Australian businesses that currently use Britain as a 'launching pad' to access the broader European market.

Consider, for example, the position of Australian financial services businesses that run their European operations from London-based subsidiaries. At present, they are able to take advantage of EU ' passporting' arrangements that allow financial institutions in one EU country to operate in the others, without having to meet the requirements of all of their respective individual regulatory regimes. Depending on what post-Brexit accommodations the UK and EU reach, Britain could lose its passporting rights, resulting in such Australian businesses having to replicate or relocate their European operations.

More generally, some observers are concerned that the UK departing European Union could result in a fracturing of the long-term European consensus regarding the free movement of people and capital. Europe is a significant destination for Australian trade, and an EU without a British voice may be more inward-looking and less committed to breaking down barriers, not only among member states but between the EU and the rest of the world. As a result, Australian businesses may find their ability to operate and trade from a single European base – whether London or elsewhere – compromised.

Even for those Australian businesses whose UK (or other) operations do not depend on access to European markets, a Brexit – particularly an acrimonious one – involves substantial risks. HM Treasury's analysis of the short-term economic impact of Britain leaving the EU concludes that "[a] vote to leave would cause an immediate and profound economic shock" which would "push the UK into recession and lead to a sharp rise in unemployment" and increase financial market volatility.

Given the likely negative consequences of a Brexit, most Australian businesses will, understandably, be hoping that the 23 June referendum sees the status quo maintained.

John W.H. Denton AO is a Partner and the Chief Executive Officer of Corrs Chambers Westgarth.

James Shirbin is a Special Counsel in Corrs' Corporate Advisory group. In 2014-15, he was a visiting lawyer at leading international law firm Slaughter and May's London office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions