CANBERRA: Brexit could have a negative impact on beef, lamb and wine exports to the UK. Rabobank senior analyst Marc Soccio said the lower pound would increase the price of Australian imports for UK consumers, prompting them to look elsewhere for products. “I think particularly you’ve got to look at the currency impacts to begin with,” Mr Soccio said.
“If you’re a beef or lamb or wine exporter to the UK, and all of the sudden the pound has dropped 10 per cent, we don’t know where that will level off at. “All of a sudden those products start to look a hell of a lot more expensive and there would be a demand impact from that if it lasts long enough. “We all expected if they did choose to leave the EU that the pound would be negatively impacted and the pound will be lower for longer as a consequence and it means the value of our key agri exports will be impacted.”
Mr Soccio said hopefully the markets had overreacted and the pound would rebound in the near future. “Initially I think the real repercussions are just going to be around capital flow,” Mr Soccio said. “People will shift their capital around in response to this result. “Financial markets we all know have been on tenterhooks since the beginning of the year, and they’ve just been waiting for some sort of a trigger for a correction, and unfortunately I think this is going to be exactly that.”
Mr Soccio said there would be a “flight to safety” of capital, with commodity markets recoiling in response to Brexit, as already seen with markets shifting to gold. “I think a lot of commodity markets are going to be really shaken by this result until we can fully digest it,” Mr Soccio said. “The same goes for currency.
“These sorts of currency shifts are going to take a while for commodity markets and financial and general equity markets to recalibrate.” Asked what impact Brexit would have on free-trade agreements and trade, Prime Minister Malcolm Turnbull said he was confident negotiations would continue. “The impact on Australia immediately, directly, from a legal point of view will be very limited because it will take some years for the United Kingdom to leave the European Union,” Mr Turnbull said.
“However we’ve seen already large falls on stock markets and there will be a degree of uncertainty for some time. “But I have no doubt our very strong and intimate relations with the United Kingdom will be entirely unaffected and our very strong relations with Europe, which are leading towards negotiations to a free-trade agreement, will also continue.”
Mr Turnbull said Australia’s relations with continental Europe, particularly Germany and France, had already “enhanced” in recent years. Mr Turnbull conceded there would be “a period of uncertainty and some instability in global markets” — and used the upheaval in Europe to spruik the Coalition’s campaign at home. “I remind Australians that, given that we are living in a world of great opportunities, but also great challenges and uncertainties, now more than ever Australia needs a stable majority Coalition government,” he said.