United Kingdom country brief

Introduction

The United Kingdom of Great Britain and Northern Ireland, also known as the UK, has a population of 64.5 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.

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

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 and informs Parliament of the Government’s policies and plans for new legislation in a speech delivered from the throne in the House of Lords. When a bill has been approved by a majority in the House of Commons and the House of Lords, the Royal Assent by the Crown turns the bill into an Act of Parliament, and it becomes 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, and national Assemblies in Wales and 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.

In 2014, Scotland voted in a referendum on independence from the UK. The outcome was a vote of 55 per cent for ‘no’ to independence and 45 per cent for ‘yes’. All of the major political parties then agreed to devolve further powers to Scotland, with further devolution also planned 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.

The UK will hold a referendum on whether to remain a member of the EU on 23 June 2016.

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 6.7 per cent larger in real terms than before the GFC. The growth rate in 2015 was 2.5 per cent. The unemployment rate has fallen to 5.6 per cent. 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 5.2 per cent of GDP in 2015, around half of its peak in 2009, and forecast to reach a small surplus in 2020. The Government’s economic strategy also includes growth measures, such as further cuts to the corporate tax rate (planned to be fully implemented by 2020) 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.

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 2009 to prepare for traditional and emerging security threats and challenges.

In 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.

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.

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.

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.

Portfolio visits to the UK

  • The Hon Julie Bishop MP, Minister for Foreign Affairs, visited the UK in February 2016 for the Syria donors’ conference and in December 2015 for meetings with senior UK officials.
  • The Hon Steven Ciobo MP, then Minister for International Development and the Pacific, visited the UK in November 2015 for meetings with the private sector and philanthropic funds, business groups and NGOs.
  • 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, then Prime Minister, visited the UK in August 2014 for meetings with UK ministers following the downing of MH17.

Visits from the UK

  • TRH the Prince of Wales and the Duchess of Cornwall visited Australia in November 2015 to mark Remembrance Day in Canberra in the centenary year of the Anzacs. The royal couple also visited Adelaide, Tanunda, Sydney, Albany and Perth.
  • 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.

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. As at 30 June 2014, 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 with more than 688,500 UK residents visiting Australia in 2015.

The UK records around 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, estimated at well over 100,000 people.

Bilateral agreements and official dialogue

Australia has many bilateral agreements with the UK including in the areas of taxation, health services, criminal investigations and migration. Shared perspectives on contemporary security threats, and common commitment to responses to 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 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 2014-15, two-way trade was worth around $21.1 billion, with Australian exports worth $8.6 billion and imports from the UK $12.6 billion. Services trade is an important element of our bilateral trade relationship. The UK was Australia’s third largest services export market in 2014-15. Australia’s services exports to the UK were valued at $4.9 billion and services imports from the UK valued at $6.23 billion.

Gold ($583 million) was Australia’s primary merchandise export to the UK in 2014-15. Other significant exports included alcoholic beverages ($376 million), lead ($311 million) and pearls and gems ($294 million). Significant imports from the UK included passenger motor vehicles ($1.0 billion), medicaments (including veterinary) ($552 million), pharmaceutical products ($332 million) and printed matter ($275 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.

Bilateral investment  

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.

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, Wesfarmers, 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), 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. The wine industry is an increasingly significant sector, with the UK currently Australia’s 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 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: 26 February 2016