United Kingdom country brief

Introduction

The United Kingdom of Great Britain and Northern Ireland, also known as the UK, has a population of approximately 64 million (2014). The UK is a multi-national state composed of four parts: England, Wales, Scotland and Northern Ireland.

Political overview

UK Parliament

The UK Parliament is the supreme legislative body in the UK and British overseas territories. The Parliament is a bicameral assembly, with an upper house, the House of Lords, and a lower house, the House of Commons. At its head is the Sovereign, Queen Elizabeth II.

The House of Commons and the House of Lords are both involved in passing legislation, scrutinising the work of the Government and debating current issues. Members of the House of Commons are publicly elected. Members of the Commons alone are responsible for making decisions on financial bills, such as proposed new taxes. The Lords can consider these bills but cannot block or amend them.

Members of the House of Lords are mostly appointed by the Queen, generally on the advice of the major political parties. A fixed number of hereditary members are elected internally (an election occurring when a vacancy arises), and a limited number of Church of England archbishops and bishops also sit in the House. The House of Lords acts as a chamber of review for legislation passed by the lower house. The Supreme Court of the United Kingdom is the highest court for all matters under English law, Northern Irish law and Scottish civil law (replacing the House of Lords, which had this role until 2009).

Government

The political party or coalition that wins the most seats in a general election forms the new government, led by its party leader — who becomes Prime Minister. The Prime Minister appoints ministers, including Cabinet members. Government ministers are chosen from the ranks of serving MPs and Lords in Parliament.

At the general election held on 7 May 2015, the Conservative Party, led by David Cameron, won 330 of the 650 seats in the House of Commons. This enabled the Conservatives to form a majority government without having to rely on a coalition partner (they had previously been in a coalition with the Liberal Democrats). The next general election will be held on 7 May 2020, unless the Parliament is dissolved earlier.

Crown

Along with the House of Commons and the House of Lords, the Crown is an integral part of the British Parliament, although the Queen’s modern role has become largely ceremonial. Generally, the day after a general election, the Queen invites the leader of the party that won the most seats in the House of Commons to become Prime Minister and to form the government. The Queen opens Parliament through the State Opening (marking the beginning of the Parliamentary year).

Each year, the Queen informs Parliament of the Government’s policies and plans for new legislation in a speech delivered from the throne in the House of Lords. Although the Queen makes the speech, it is written by the Government. When a bill has been approved by a majority in the House of Commons and the House of Lords, it is formally agreed to by the Crown. Known as the Royal Assent, this turns a bill into an Act of Parliament, allowing it to become law in the UK.

Devolution

Parliamentary reforms in the UK, referred to as "devolution", have created a number of national assemblies, including a national Parliament in Scotland, a national Assembly in Wales and a national Assembly in Northern Ireland. This process transferred varying levels of power from the UK Parliament to the national assemblies — but preserved authority over the devolved institutions in the UK Parliament itself.

Scotland, Wales and Northern Ireland all held successful referendums on devolution in the late 1990s. This led to the establishment of the separate national assemblies and the democratic election of officials. The Scottish Parliament and the National Assembly for Wales took responsibility for their devolved powers on 1 July 1999, the Northern Ireland Assembly on 2 December 1999. The Northern Ireland Assembly was suspended at midnight on 14 October 2002. Power was restored to the Assembly on 8 May 2007.

On 18 September 2014, Scotland voted in a referendum on independence from the UK. The outcome of the referendum was a vote of 55 per cent for ‘no’ to independence and 45 per cent for ‘yes’. All of the major political parties subsequently agreed to devolve further powers to Scotland, with further devolution also in prospect for Wales and Northern Ireland.

Europe

The UK is one of 28 member states of the European Union (EU) and is subject to EU legislation. One of the roles of the UK Parliament is to scrutinise EU draft legislation and other EU documents and to change UK law to reflect agreed EU legislation and treaties.

In the UK, the Scrutiny Reserve Resolutions provide that no UK minister should agree in the European Council of Ministers or the European Council to a proposal that is still “subject to scrutiny” in the UK Parliament — and if they do, requires them to provide reasons for doing so. The UK Parliament receives copies of EU documents, together with an Explanatory Memorandum prepared by the relevant government department. Documents are considered by the Scrutiny Committees in both the Commons and the Lords.

In December 2014, the UK concluded a stocktake of power-sharing arrangements between the UK and the EU, known as the Balance of Competences Review. The Review was intended to assess whether the extent of the EU’s powers served the UK’s national interest. Prime Minister Cameron has said that he is committed to holding a referendum on the UK’s membership of the EU by the end of 2017.

Economic overview

In GDP terms, the UK is the world’s fifth largest economy. The UK was hard hit by the global financial crisis (GFC) in 2008 and again by the Eurozone crisis, but the economy has recovered and is now 4 per cent larger in real terms than before the GFC. The growth rate in 2014 was 2.6 per cent – one of the G7’s highest. The unemployment rate has fallen to 5.5 per cent (April 2015). The UK’s growth prospects, however, continue to depend to a significant extent on a recovery in the global economy, particularly the EU, which is the UK’s largest export market.

Britain’s budget deficit is being reduced on the back of the Government’s large fiscal consolidation program. The budget deficit is expected to be 3.3 per cent of GDP in 2014-15, around half of its peak in 2009-10, and forecast to reach a small surplus in 2018-19. The Government’s economic strategy also includes growth measures, such as a cut to the corporate tax rate (now fully implemented) and increasing capital spending on roads and infrastructure.

Bilateral relationship

Australia has a significant relationship with the UK underpinned by our shared heritage, common values, closely aligned strategic outlook and interests. We share a distinguished record of active service and cooperation in conflict zones around the world, often in partnership with the United States. We are regular dialogue partners at the highest levels across government and are like-minded on pressing global issues, including international security, multilateral cooperation and economic issues on the G20 agenda. We share an extensive economic, trade and investment relationship. We also benefit from strong people-to-people links. There are regular high-level visits in each direction.

AUKMIN VII

The annual Australia-UK Ministerial Consultations (AUKMIN) bring together foreign and defence ministers from both countries. AUKMIN is the premier bilateral forum for consultations on foreign policy, defence and security issues. At AUKMIN, ministers look for ways in which Australia and the UK can work together more effectively to deal with contemporary global challenges. Australia hosted the seventh AUKMIN in Sydney in February 2015. AUKMIN consultations have previously been held in London in 2014, 2012 and 2006, Perth in 2013, Sydney in 2011 and Leeds in 2008.

At AUKMIN VII, ministers discussed the Middle East, including responding to the growing threat of Daesh (also known as ISIL) and foreign fighters, Afghanistan, the evolving security situation in east Asia, European security, and defence planning and interoperability. They agreed to continue close cooperation on counter-terrorism, including in the Asia Pacific region, and undertook to continue consultations on the Australian Defence White Paper and the UK Strategic Defence and Security Review. In the margins, foreign ministers signed a Memorandum of Understanding (MOU) on crisis cooperation. The agreement formalised the current practice whereby officials use the other country’s diplomatic facilities during a major crisis or incident in locations where one of us has a diplomatic mission and the other does not.

Australia-UK National Security Partnership

Australia and the UK agreed on a bilateral National Security Partnership in March 2009. The National Security Partnership gives further structure and impetus to existing strong cooperation between Australia and the UK on security matters. It provides a strong foundation on which to prepare not only for traditional security threats, but also for emerging security challenges, such as those posed by poverty and weak governance.

On 9 March 2011, Australia and the UK signed an MOU to provide for science and innovation cooperation in support of shared counter-terrorism and national security interests. The MOU facilitates cooperation between a range of partners, including government departments, research organisations and industry.

Aid cooperation

DFAT has a strong and productive partnership with the UK Department for International Development (DFID), working closely together on a range of shared development priorities. These are outlined in the 2014 DFAT-DFID Partnership Arrangement. Current priorities for collaboration include: economic growth and development, including aid for trade and leveraging the private sector; gender equality and women’s empowerment; humanitarian and conflict approaches; and global development policy agendas, including the G20 development agenda, post-2015 development framework and development finance.

Central to the Australia-UK donor partnership is our shared commitment to increasing the effectiveness, transparency and accountability of our respective development programs. We have a long history of close cooperation, particularly in health, education and food security. Most recently, Australia and the UK worked closely together to establish front-line medical services in Sierra Leone, to combat the ebola outbreak.

High level visits

The strength of the Australia-UK bilateral relationship is reflected in the large number of high-level visits in both directions. Bilateral visits facilitate consultation and cooperation across the broad range of policy issues of common interest.

Visits to the UK

  • The Hon Kevin Andrews MP, Minister for Defence, visited the UK in April 2015 for bilateral discussions on defence and security.
  • Senator the Hon George Brandis QC, Attorney-General, visited the UK in April 2015 for ANZAC Day commemorations.
  • The Hon Greg Hunt MP, Minister for the Environment, visited the UK in April 2015 for bilateral discussions on climate change.
  • Senator the Hon George Brandis QC, Attorney-General, visited the UK in February 2015 for the Five Country national security ministers’ meeting in London.
  • Senator the Hon Stephen Parry, President of the Senate, visited the UK in January 2015 for the Conference of Speakers and Presiding Officers of the Commonwealth, held in Jersey.
  • The Hon Julie Bishop MP, Minister for Foreign Affairs, visited the UK in September 2014 for the NATO Summit in Wales.
  • The Hon Tony Abbott MP, Prime Minister, visited the UK in August 2014 for meetings with UK ministers following the downing of MH17.

Visits from the UK

  • HRH Prince Harry visited Australia in April 2015 for a four-week placement with the Australian Defence Force.
  • HRH Prince Edward, Duke of Kent, visited Melbourne, Adelaide and Canberra in April 2015. In Canberra, HRH attended the Anzac Day dawn service.
  • The Rt Hon Philip Hammond MP, Secretary of State for Foreign and Commonwealth Affairs and the Rt Hon Michael Fallon MP, Secretary of State for Defence, visited Sydney in February 2015 for the AUKMIN VII meeting.
  • The Rt Hon David Cameron MP, Prime Minister, visited Canberra, Sydney and Brisbane for the G20 Leaders’ Summit and other events in November 2014.
  • The Rt Hon Hugo Swire MP, Foreign and Commonwealth Office Minister of State, visited in September 2014 for meetings with Australian Government ministers in Canberra and to review UK business interests in Melbourne.
  • Lord Ian Livingston, Minister of State for Trade and Investment, visited in July 2014 for the G20 Trade Ministers’ meeting in Sydney.
  • TRH the Duke and Duchess of Cambridge visited Sydney, Brisbane, Canberra, Uluru and Adelaide in April 2014. In Canberra the royal couple attended the ANZAC Day march and commemorative service at the Australian War Memorial.

People-to-people links

The strength of Australia-UK official linkages is complemented by the depth of people-to-people links, especially travel and migration flows between the two countries. In 2013-14, an estimated 5.2 per cent of Australia’s resident population was born in the UK.

The UK is Australia’s third largest source of visitors (after New Zealand and China) with 652,100 UK residents visiting Australia in 2014.

The UK records more than 1 million Australian visits to its shores each year. Australians represented the 10th largest source of visitors to the UK in 2014. There is also a large Australian population resident in the UK.

Bilateral agreements and official dialogue

Australia has many important bilateral agreements with the UK including in the areas of taxation, health services, criminal investigations and migration. Shared perspectives on contemporary security threats, including terrorism, the proliferation of weapons of mass destruction and cyber security, and our common commitment to the responses needed to meet those threats, have given new impetus to our close bilateral dialogue on a wide range of diplomatic, intelligence, military and strategic issues.

Australia joined the UK’s Youth Mobility Scheme in November 2008, allowing young Australians to continue to be able to visit and work in the UK, subject to certain conditions. UK nationals are able to visit and work in Australia under a Working Holiday Arrangement.

The most up-to-date information on UK immigration policies can be found on the UK Visas and Immigration website.

Bilateral economic and trade relationship

Australia and the UK have an extensive economic and trade relationship. For trade in goods and services, the UK is Australia’s seventh largest two-way trading partner, our eighth largest export market and our eighth largest source of imports. The UK is also our leading EU trade partner. We each have a large commercial presence in the other’s country.

In 2014, two-way trade was worth around $20.80 billion, with Australian exports worth $8.32 billion and imports from the UK $12.48 billion. Services trade is an important element of our bilateral trade relationship. The UK was Australia’s third largest services export market in 2014. Australia’s services exports to the UK were valued at $4.55 billion and services imports from the UK valued at $6.32 billion.

Gold exports ($878 million) accounted for about 23 per cent of our total merchandise exports to the UK in 2014. Other significant exports included alcoholic beverages ($383 million), lead ($301 million) and manufactured articles (principally orthopaedic appliances) ($272 million). Significant imports from the UK included passenger motor vehicles ($1.01 billion), medicaments (including veterinary) ($639 million), and printed matter ($274 million).

Investment

The UK is the second largest source of total and direct foreign investment in Australia. As at the end of 2014, total UK foreign investment in Australia was valued at $484.16 billion. Direct UK foreign investment in Australia was valued at $87.37 billion.

As at the end of 2014, total Australian investment in the UK was $304.54 billion – making the UK Australia’s second most important foreign investment destination.

UK investment in Australia

British businesses have traditionally viewed Australia as an attractive base for regional operations and have invested in a wide range of industries, including the infrastructure, pharmaceuticals, energy and travel industries. Approximately a third of all regional headquarters operations in Australia are European, and of these almost half are British. Major UK investors in Australia include Shell, BP, British Aerospace, BT and Vodafone.

Australian investment in the UK

Approximately 1500 Australian companies are active in the UK, with a large number using the UK as a base for continental Europe. Key Australian investors in the UK include: Macquarie, National Australia Group (with Clydesdale Bank and Yorkshire Bank), AMCOR, Lend Lease, Mayne Nickless, Westpac, the Commonwealth Bank, ANZ, Cochlear, ResMed, CSL, Boral, and dual listed companies GKN Brambles, Rio Tinto, and BHP Billiton.

Export opportunities

Australian goods and services exports to the UK have a broad base, covering a wide range of sectors. This base includes major firm activity (such as in financial services, with Australian banks having a longstanding presence in the market), through to small and medium enterprises. The results of Australia’s International Business Survey 2014 (AIBS 2014), which included data from more than 1600 Australian businesses, re-affirmed the importance of the UK market to Australian businesses. The survey found that Australian businesses considered the UK their fourth most important current and future market. The UK was rated the most important market for software and media, and the third most important market for elaborate manufactures, professional services, and wholesale trade. ABS data for 2013/14 for goods exporters also showed that the UK was the sixth most frequent export destination for Australian goods exporters, with 5153 individual firms exporting to the market in that year.

While resources are our leading export, the wine industry is an increasingly significant sector in Australia’s trade with the UK. The UK is currently our second most valuable wine export destination. Australian wine is a market leader in the UK and has been for a decade. One in five imported bottles of wine consumed in the UK is Australian. Some other areas of recent export growth include beef, diamonds and precious metals and telecommunications equipment.

The Australian Trade Commission (Austrade) is the Australian Government’s trade, investment and education promotion agency. Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally. In established markets, such as the UK, Austrade assists Australian exporters through referrals to specialist service providers and business advisors, for assistance on a commercial basis. There is a wide range of support available to Australian firms from specialist service providers in the UK. Austrade London can assist with details of service providers in areas such as business services, and market entry and strategy advice.

Last Updated: 1 July 2015