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. 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 2005).

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. The next general election will be held on 7 May 2015.

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 September 2014, Scotland will vote in a referendum on independence from the UK. 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 of 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 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 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 is the world’s sixth largest economy. The UK was hard hit by the global economic crisis in 2008 and again by the Eurozone crisis. But the economy is now recovering strongly and is set to reach its pre-crisis level of GDP by mid-2014, with growth of 0.8 per cent in the first quarter of 2014, and forecast growth of 2.7 per cent for the full year. The unemployment rate has been reduced faster than anticipated, down to 6.8 per cent in the three months to March 2014. However, the UK’s growth prospects 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 underlying budget deficit (which excludes government policy decisions that temporarily flatter the forecasts) is expected to be 5.5 per cent of GDP in 2014-15, 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 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, 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 and economic issues on the G20 agenda. We share an extensive economic, trade and investment relationship. We also benefit from wide-ranging people-to-people links. There are frequent high-level visits in each direction.

AUKMIN VI

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 more effectively together to deal with contemporary global challenges. The UK hosted the sixth AUKMIN in London in March 2014. AUKMIN consultations have previously been held in London in 2012 and 2006, Perth in 2013, Sydney in 2011 and Leeds in 2008.

At AUKMIN VI, foreign ministers signed a ‘Joint Statement on Enhanced Diplomatic Network Cooperation’ to enable our respective diplomatic networks to share best practice and develop new initiatives in areas such as consular crisis training, IT and property cooperation. Ministers discussed the UN Security Council agenda, challenges around conflict and crisis response, and developments in the Asia Pacific region, with particular focus on areas where the UK and Australia can work more closely together or share resources. Defence-related discussions focused on developing inter-operability between our respective Armed Forces, building on the close relationship most recently fostered in Afghanistan and Iraq.

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 a Memorandum of Understanding (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.

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. In 2013, 5.3 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 more than 663,300 UK citizens visiting Australia in the year to March 2014.

More than 1 million Australians visit the UK each year. Australians represented the 10th largest source of visitors to the UK in 2013. 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 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.

In April 2011, the UK made changes to its immigration system that 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 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 ninth 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 2013, two-way trade was worth around $19.89 billion, with Australian exports worth $7.84 billion and imports from the UK $12.04 billion. Services trade is an important element of our bilateral trade relationship. The UK was Australia’s third largest services export market in 2013. Australia’s services exports to the UK were valued at $3.98 billion and services imports from the UK were valued at $5.85 billion.

Gold exports ($668 million) accounted for 17 per cent of our total merchandise exports to the UK in 2013. Other significant exports included lead ($404 million), coal ($383 million) and alcoholic beverages ($374 million).

Significant imports from the UK included passenger motor vehicles ($1.08 billion), medicaments (including veterinary) ($665 million), and specialised machinery and parts ($274 million).

Investment

The UK is the second largest source of total and direct foreign investment in Australia. In 2013, total UK foreign investment in Australia was valued at $562.89 billion. Direct UK foreign investment in Australia was valued at $86.67 billion.

In 2013, total Australian investment in the UK was $255.67 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, 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

Australian goods and services exports to the UK have a broad base, covering a very wide range of sectors. This includes major firm activity (such as in financial services, with Australian banks having a longstanding presence in the market), through to a large number of small and medium enterprises. The results of Australia’s International Business Survey 2014 (AIBS 2014), which included data from more than 1,600 Australian businesses, re-affirmed the importance of the UK market to Australian businesses.  Findings included that the UK ranked: fourth for both ‘top current market’ and ‘top future target market’ and top three ‘important markets by sector’ for professional services and elaborate manufactures. ABS data for 2012/2013 for goods exporters also shows that the UK is the seventh most popular export destination for Australian goods exporters, with 4599 individual firms exporting to the market in that year.

While minerals 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 the market leader in the UK and has been for a decade. One in five bottles of wine consumed in the UK is Australian. Some recent growth areas include premium fruit, meat and organic produce.

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 June 2014