Travel

United Kingdom Country Brief

Introduction

The United Kingdom of Great Britain and Northern Ireland, also known as the United Kingdom (UK), has a population of approximately 60 million people. The UK is a multi-national state composed of four parts: England, Wales, Scotland and Northern Ireland.

The UK also has 14 Overseas Territories, spread throughout the globe. The Overseas Territories are:

Anguilla, British Antarctic Territory, Bermuda, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, St Helena and Dependencies (Ascension Island and Tristan da Cunha), Turk and Caicos Islands, Pitcairn Island, South Georgia and South Sandwich Islands, Sovereign Base Areas on Cyprus.

Political Overview

UK Parliament

The UK Parliament is the supreme legislative body in the United Kingdom 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 perform similar roles in that they are both involved in passing legislation, scrutinising the work of the government and debating current issues. The House of Commons is also responsible for granting money to the government through approving Bills that raise taxes.

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 and its work complements the business of the Commons. The House of Lords is also the highest court in the UK - the supreme court of appeal. A group of salaried, full-time judges known as Law Lords carry out this judicial work.

Members of the Commons are publicly elected. The party with the largest number of members in the Commons forms the government. Members of the Commons (MPs) debate the political issues of the day and proposals for new laws. 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 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, who often head government departments, and run and develop public services and policies. Government ministers are chosen from the ranks of serving MPs and Lords in Parliament.

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. 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 following 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.

Europe

The UK is one of 27 member states of the European Union and is subject to European Union (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, they have to explain their reasons. 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.

Recent Political Developments

In the 2005 general election, Tony Blair's Labour Party won a third consecutive term. Gordon Brown became Prime Minister on 27 June 2007 following Tony Blair's resignation. There are 646 seats in the British House of Commons. The Labour Party currently holds 350 seats while the Conservative Party holds 193 seats. Other significant parties in the British Parliament include the Liberal Democrats (63 seats), the Scottish National Party (10 seats) and the Democratic Unionist Party (9 seats).

Economic Overview

The United Kingdom is the sixth largest economy in the world, with a GDP of US$2.7 trillion (A$3.1 trillion). The UK is the world’s second largest exporter of commercial services, traditionally has a surplus in its services trade, and is also the third largest importer of commercial services. It is the world’s second largest foreign direct investment destination and the largest market for foreign direct investment in Europe.

Figures released in January 2009 by the UK Office of National Statistics confirmed the UK economy contracted by 1.5 per cent in the final quarter of 2008. The contraction followed a 0.6 per cent fall in economic growth in the September quarter and signalled the UK was officially in recession. Figures released in March 2009, showed that the number of unemployed in Britain had increased to 2.03 million.

The UK Government has taken a series of measures in response to the difficult economic situation, including recapitalising banks, guaranteeing inter-bank lending and implementing a capital investment program. On 2 April 2009, Prime Minister Brown hosted a G20 Leaders’ Meeting in London to help coordinate international action on the global financial crisis. The meeting was attended by Prime Minister Rudd and other world leaders.

Bilateral Relationship

Australia has a special relationship with the UK that is 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 in Iraq and 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 climate change. We share long-standing trade and investment relations and benefit from extensive people-to-people links.

Prime Minister Rudd met UK Prime Minister Gordon Brown in London on 30 March 2009, in the lead-up to the G20 Leaders meeting. The two Prime Ministers agreed on a new National Security Partnership between Australia and the UK. The new National Security Partnership was in line with the Prime Ministers’ agreement on 7 April 2008 to strengthen and transform the Australia - UK relationship into a "dynamic and contemporary partnership".

Second Australia - UK Ministerial Dialogue (AUKMIN II)

On 28 November 2008, the Minister for Foreign Affairs, Stephen Smith, and the Minister for Defence, Joel Fitzgibbon, participated in the second Australia-UK Ministerial Dialogue (AUKMIN) with UK Secretary of State for Foreign and Commonwealth Affairs, David Miliband, and Secretary of State for Defence, John Hutton. The Ministers’ consultations reflected the closeness of the relationship between Australia and the UK, our aligned strategic outlook and a common commitment to work together in a rapidly changing global environment.

High Level Visits

The strength of the Australia-UK bilateral relationship and the variety of issues on which we cooperate is evident from the large number of high level visits in both directions.

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 activity between the two countries. According to Australian Bureau of Statistics figures, 5.5% of Australia's resident population was born in the UK. There is also a large Australian population in the UK. More than 106,000 Australian born citizens currently live there, almost half of them in London. The UK is Australia's second largest source of visitors (after New Zealand) with more than 670,000 citizens from the UK visiting Australia each year. Australians are the 10th largest visitor source for the UK, with around 950,000 Australians visiting there each year.

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 the security threats posed by terrorist groups with global reach, weapons of mass destruction, rogue states 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 newly introduced 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.

Bilateral Economic and Trade Relationship

Australia and the United Kingdom have an extensive economic relationship. The United Kingdom is Australia's sixth largest merchandise trade partner, our seventh largest merchandise export market and our seventh largest source of merchandise imports. The United Kingdom is also our leading EU trade partner. On services trade, the United Kingdom is our third largest partner, our second largest services export market and our third largest source of imports. We have a large commercial presence in each other’s country.

Merchandise Trade

In 2008, two-way merchandise trade was worth around A$19.3 billion, with exports worth A$9.3 billion and imports A$10.0 billion. One of the most significant features was the increase over the year of our exports of gold (mainly gold bullion) to A$4.8billion, up by 75.9 per cent on 2007.. As a result the merchandise trade deficit fell substantially to A$629 million (from A$1.1 billion in 2007) and gold exports now account for 51.7 per cent of our total merchandise exports to the United Kingdom.

Other significant exports include coal with shipments worth A$962 million, after a decline in 2007. Alcoholic beverages were Australia’s third largest export to the UK with shipments in 2008 valued at A$814million (the United Kingdom is our largest export destination for wine). Lead exports continue to increase and were valued at A$506 million in 2008.

Gold imports from the United Kingdom rose by 88.1 per cent to reach A$3.3billion (or a third of total merchandise imports). Other significant imports from the UK, included medicaments (A$855 million), motor vehicles (A$504 million), organic and inorganic compounds (A$432 million) and printed matter (A$338 million).

Services Trade

Services trade is also important to our bilateral trade relationship. In the most recent figures available, the UK was Australia’s third largest services trading partner in 2007-08. Australia’s services exports to the UK were valued at A$4.7 billion and services imports from the UK were valued A$4.2 billion.

Investment

The United Kingdom is a major investment partner for Australia - our second largest source of total foreign investment and the second largest destination of total Australian investment. In 2007, UK foreign direct investment in Australia was worth A$64 billion while foreign direct investment by Australian interests in the UK was worth A$28 billion.

UK Investment in Australia

British businesses have traditionally viewed Australia as an attractive base for regional operations and have invested in 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 United Kingdom

Approximately 1,500 Australian companies are active in the United Kingdom, with a large number using the United Kingdom as a base for continental Europe. Key Australian investors in the United Kingdom 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 BHPBilliton.

Notable recent achievements by Australian companies in the United Kingdom include Denton Corker Marshall Architects' win at an international design-competition for the headquarters of the Ministry of Justice in the North West of England - the largest court complex to be built in the United Kingdom since the Royal Courts of Justice in London. Oceanlinx, a developer of wave-technology energy, won a bid to use its unique wave energy converter at the UK's Wave Hub, off the coast of Cornwall, to meet the region's requirement to reduce carbon dioxide emissions and use renewable energy sources.

Export Opportunities

The wine industry, rather than traditional commodities such as wool and iron ore, has become a major driving force behind Australia's contemporary trade with the UK. The UK is currently our largest wine export destination. 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.
For further information see the Austrade website.

Tradeinfo Contacts

If you would like more information on the trade and economic conditions in the United Kingdom, please e-mail the Department of Foreign Affairs and Trade: tradeinfo@dfat.gov.au

Last reviewed date: 10/05/2009