Flag of the United Kingdom

United Kingdom country brief

Introduction

The United Kingdom of Great Britain and Northern Ireland, also known as the UK, has a population of approximately 63 million people. 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 Lords are mostly appointed by The Queen. A fixed number are elected internally 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. Prior to the Constitutional Reform Act 2005, the House of Lords was also the highest court in the UK. The Supreme Court of the United Kingdom is now the highest court for all matters under English law, Northern Irish law and Scottish civil law.

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.

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 6 May 2010, the Conservative Party, led by David Cameron, won 306 of the 650 seats in the House of Commons. The Liberal Democrats, led by Nick Clegg, won 57 seats. Following the election, the Conservatives and the Liberal Democrats announced a coalition Government with David Cameron as Prime Minister and Nick Clegg as Deputy Prime Minister.

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). She also dismisses Parliament before a general election at the request of the Prime Minister (dissolution).

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.

In 2014 Scotland will vote in a referendum on independence from the United Kingdom. An agreement was signed in October 2012 by Prime Minister, David Cameron and First Minister of Scotland, Alex Salmond, which provides a legal framework for the referendum. The agreement provides that the referendum will be a single “Yes/No” vote (rather than providing an alternate option of increasing the devolution powers). 16 and 17 year olds will be entitled to take part in the referendum. Only those resident in Scotland at the time of the referendum will be entitled to vote.

Europe

The UK is one of 28 member states of the 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 is currently undertaking a stocktake of power-sharing arrangements between the UK and EU, known as the Balance of Competences Review. The Review will assess whether the extent of the EU’s powers serve 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, provided the Conservatives win a majority in the next general election in 2015.

Economic overview

The UK was the world's sixth largest economy in 2012. The UK was hard hit by the global economic crisis in 2008 and again by the Eurozone crisis. In March 2013, the government’s Office of Budget Responsibility (OBR) revised down forecasts of economic growth, with the 2013 GDP growth forecast cut in half to 0.6 per cent, and 2014 revised to 1.8 per cent from 2.0 per cent. The UK’s growth prospects depend to a significant extent on a recovery in the global economy, particularly the Eurozone which represents about 40 per cent of UK’s total export market. Britain’s structural budget deficit remains one of the highest in the world. The underlying budget deficit (which excludes government policy decisions that temporarily flatter the forecasts) is expected to remain broadly unchanged in 2012-13 at 7.8 per cent of GDP, but is expected to decrease every year thereafter to reach 2.3 per cent in 2017-18. As a result of the worsened outlook, government austerity measures have been extended to 2017-2018, one year longer than expected. The government’s economic strategy also includes growth measures, such as a cut to the corporate tax rate and increasing capital spending on roads and infrastructure from 2015.

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, including Afghanistan, often in partnership with the United States. We are frequent and regular dialogue partners at the highest levels across government and are like-minded on pressing global issues, including international security, multilateral cooperation, climate change and economic issues on the G20 agenda. We also benefit from extensive people-to-people links. There are frequent high-level visits in each direction.

AUKMIN V

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

At AUKMIN V, Defence Ministers signed the Australia-United Kingdom Defence and Security Cooperation Treaty. This agreement formalises and provides an overarching strategic framework for our bilateral defence relationship. It encapsulates our close practical cooperation, including through the exchange of information and analysis on strategic defence and security issues; engagement on science, technology, equipment and support matters; ways to achieve value for money in defence acquisition and capability sustainment; and defence reform and transformation.

Australia-UK National Security Partnership

Australia and the UK agreed on a new 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 climate change, poverty and weak governance.

On 9 March 2011, Australia and the UK signed a Memorandum of Understanding 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.

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

Visits from the UK

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. According to Australian Bureau of Statistics figures 5.3% 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 more than 588,000 UK citizens visiting Australia in 2012-13.

More than 1 million Australians visit the UK each year. Australians represented the 10th largest source of visitors to the UK in 2012. There is also a large Australian population resident in the UK. In 2011, more than 116,000 Australian born citizens lived 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 response 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.

In April 2011 the UK made changes to its immigration system, which affect Australians wishing to live or work in the UK. The most up-to-date information on UK immigration changes can be found on the UK Border Agency 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 sixth largest two-way trading partner, our seventh largest export market and our seventh 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 2012, two-way trade was worth around $22.3 billion, with exports worth $10.58 billion and imports $11.76 billion. Gold exports account for 55 per cent of our total merchandise exports to the UK. Other significant exports include coal with shipments worth $453 million and alcoholic beverages worth $406 million.

Significant imports from the UK included passenger motor vehicles ($891 million), medicaments (including veterinary) ($788 million), and printed matter ($298 million).

Services trade is also important to our bilateral trade relationship. The UK was Australia's third largest services export market in 2012. Australia's services exports to the UK were valued at $3.88 billion and services imports from the UK were valued $5.04 billion.

Investment

The UK is the second largest source of total and direct foreign investment in Australia. In 2012, total UK foreign investment in Australia was valued at $496.39 billion. Direct UK foreign investment in Australia in 2012 was valued at $79.42 billion.

In 2012, total Australian investment in the UK was $217.88 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 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, Yorkshire Bank and Northern 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

While minerals remain our leading export, the wine industry has become an increasingly significant sector in Australia's contemporary trade with the UK. The UK is currently our second largest wine export destination. Australian wine is the market leader in the UK and has been for a decade. One in five bottles of wine consumed in the UK is Australian. While gold, lead and coal remain significant exports, another opportunity area for Australian businesses is fresh produce, including premium fruit, meat and organic produce. Potential also exists for Australian business in e-commerce, for example government-to-citizen and government-to-business portal solutions, government intranet and extranet solutions, web-based transaction systems and online storage and retrieval systems.

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.

Updated September 2013