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.
Political Overview
System of Government
The Westminster system of government is a form of representative democracy under which the political party with the majority of seats in the lower House (the House of Commons) forms the government. The leader of that party is the Prime Minister who appoints a ministry from both the House of Commons and the upper non-elected chamber (the House of Lords). Senior ministers (normally from the Commons) are given the title 'Secretary of State' and are members of the Cabinet. Junior ministers go by the title 'Minister of State' or 'Parliamentary Under-Secretary'. The British constitution is not written down; some major constitutional issues covering issues relating to succession to the Crown, the UK Parliament, and the Union of Scotland, Wales, England and Northern Ireland are dealt with in legislation.
Voting for the House of Commons is conducted on a first-past-the-post system and is not compulsory. Regional assemblies have been established for Scotland, Wales, and Northern Ireland. Voters elect local councils and representatives (Members of the European Parliament) in the European Parliament. UK general elections must take place within five years of the previous election.
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. Since taking office for the third time the Labour Party's popularity has gradually declined. This has been largely attributed to slowing economic growth, concerns about increasing inflation, food and fuel prices, housing affordability and rising levels of personal debt and unemployment.
Devolution
In May 1999 Scotland elected a 129-member unicameral parliament with primary legislative powers in several areas including health, education, local government, transport, economic development, agriculture and social services. The UK Government has maintained responsibility in the areas of the constitution, foreign affairs and defence, civil service, and national security.
The Welsh Assembly is a 60-member chamber with more limited legislative powers in areas including industrial and economic development, education and training, health, agriculture, and local government.
Elections were held on 3 May 2007 for the Scottish Parliament, Welsh Assembly and local councils. The Scottish National Party (SNP; 47 seats) received more votes than Labour (46 seats) to become the largest party in the 129 seat chamber. In Wales, Labour is the largest party but remains short of a majority. The Conservatives control a number of local councils, including in northern England.
The 7 March 2007 Northern Ireland elections saw the two largest parties, the Democratic Unionist Party (DUP) and Sinn Fein, increase their support, with falls in support for the Ulster Unionist Party (UUP) and the Social Democratic and Labour Party (SDLP). Devolved government was restored to Northern Ireland after an historic power-sharing agreement was reached in April 2007 by Sinn Fein and the DUP.
Economic Overview
The United Kingdom is the fifth largest economy in the world, with a GDP of US$2.8 trillion (A$4.4 trillion). The UK is the world’s second largest exporter, traditionally has a surplus in its services trade, and is also the largest importer of commercial services. It is the world’s second largest investment destination and the largest market for foreign direct investment in Europe.
In 2007 the UK economy grew by three per cent, its fastest rate in seven years. However in 2008, the UK has been subject to a sharp economic slowdown, as a result of the global financial crisis, high oil prices and a slumping property market. High inflation and slowing growth including waning business confidence and falls in consumer spending have prompted fears of a possible recession. The Bank of England forecasts the UK economy will expand about 0.1 per cent on a year-on-year basis in the first quarter of 2009, compared with a previous prediction of 1 per cent GDP.
Private consumption accounts for approximately two-thirds of GDP in the UK. The manufacturing sector, as in most industrialised countries, accounts for a declining share of GDP. This declining share is due to factors that include the long-term decline of industries such as shipbuilding and textiles, which can no longer compete with imports from lower wage cost countries. The strength of sterling's exchange rate, which has weakened the trade competitiveness of export-oriented manufacturers, has also been a contributing factor. The services sector has grown in importance and now accounts for two-thirds of GDP. The financial and business services sector as a whole accounts for over 70 per cent of GDP. (Source: EIU Viewswire)
The British Government has acted decisively in response to the global financial crisis. On 13 October Prime Minister Brown announced a ₤37 billion ($86 billion) financial rescue plan, including a bailout package for three British banks and Treasury guarantees covering British loans and deposits. The Government subsequently announced a multi-billion pound mixture of tax cuts and spending rises to stimulate the economy, on 24 November. On 10 November, Mr Brown said the financial crisis reflected underlying and unprecedented change in the world, including the rise of Asia and the shift of global manufacturing power, growing resource pressures, the undeniable reality of climate change and new political instabilities and conflicts. Brown has said he would continue to emphasise to world leaders the importance of greater transparency, risk management and prudential control in international banking.
Bilateral Relationship
Overview
Australia has a special relationship with the UK that springs naturally from our shared heritage, common values and mutual interests. We share a distinguished record of active service and cooperation in conflict zones around the world, including Iraq and Afghanistan. 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, trade and development and climate change. We share vibrant trade and investment relations and benefit from extensive people-to-people links. The relationship is underpinned by a frank and robust bilateral dialogue at head-of-government, ministerial and senior officials level.
Australia and the UK have a long history of defence and security cooperation. Australian and British forces have served alongside one another in many international operations, including as part of United Nations peacekeeping forces. Australia and the UK maintain important bilateral defence and security links, including the Five Powers Defence Arrangements (FPDA) with Malaysia, Singapore and New Zealand. Cooperation between our defence forces also continues to be vitally important in terms of training, secondment and operational deployment with assigned units.
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-United Kingdom Ministerial Dialogue (AUKMIN) with UK Secretary of State for Foreign and Commonwealth Affairs, the Rt Hon David Miliband MP, and Secretary of State for Defence, the Rt Hon John Hutton MP.
AUKMIN is an important bilateral forum for consultations on key contemporary global challenges, with the aim of generating new ideas and identifying ways in which Australia and the UK can work closely together in areas of shared interest.
The 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. In April 2008 Prime Minister Rudd visited the UK. During his four day visit, Mr Rudd had an audience with Her Majesty the Queen at Windsor, met with UK Prime Minister Gordon Brown and Secretary of State for Foreign and Commonwealth Affairs David Miliband, attended the Progressive Governance conference and addressed the Confederation of British Industry and Australian business on future growth sectors of the Australian economy.
From 27 to 30 November, the Minister for Foreign Affairs, Stephen Smith visited the UK to participate in the second Australia-United Kingdom Ministerial Dialogue (AUKMIN). While in London Foreign Minister Smith met other senior UK interlocutors, including the Rt Hon Lord Malloch-Brown, Minister for Africa, Asia and the UN, Ms Gillian Merron MP, Parliamentary Under-Secretary of State responsible for Australia and the Pacific in the Foreign and Commonwealth Office and Commonwealth Secretary-General Mr Kamalesh Sharma. Minister for Defence Mr Joel Fitzgibbon visited the UK to take part in AUKMIN on 28 November.
Minister for Climate Change and Water, the Hon Penny Wong, visited London from 14 to16 October. Ms Wong held discussions with UK Ministers, officials and business, including the Rt Hon Ed Miliband MP, Secretary of State for Energy and Climate Change.
The Minister for Foreign Affairs, Stephen Smith, visited London from 4-7 June 2008. During his visit Mr Smith met with Secretary of State for Foreign and Commonwealth Affairs David Miliband; Secretary of State for Environment, Food and Rural Affairs, Hilary Benn; Minister of State Foreign and Commonwealth Office Mark Malloch Brown; and the Commonwealth Secretary General, Kamalesh Sharma.
The Minister for Infrastructure, Transport, Regional Development and Local Government, Anthony Albanese, visited London from 8-11 July and signed the UK-Australia bilateral Air Services Agreement with Parliamentary Under Secretary of State for the Department of Transport, Jim Fitzpatrick.
Deputy Prime Minister Julia Gillard visited London from 29 June -2 July. Her program included calls on several Ministers including Mr Miliband; Secretary of State for Work and Pensions, James Purnell; and Secretary of State for Innovation, Universities and Skills, John Denham.
Treasurer Wayne Swan visited the UK in June 2008. He met the Chancellor of the Exchequer Alistair Darling and addressed the Australian Business Forum.
In addition to ministerial visits, other federal and state politicians undertake official visits to the UK regularly. Australia's Governor-General, His Excellency Major General Michael Jeffery, last visited the UK in October 2007.
Her Majesty the Queen visited Australia in March 2006 to open the Melbourne Commonwealth Games. The then UK Secretary of State for Defence, Des Browne, visited Australia in May 2008 meeting with Prime Minister Rudd, Foreign Affairs Minister Smith and Defence Minister Joel Fitzgibbon. The then UK Under Secretary of State for Foreign and Commonwealth Affairs, Meg Munn, also visited Australia in May 2008 and held meetings with Deputy Prime Minister, Julia Gillard and the Parliamentary Secretary for Pacific Island Affairs, Duncan Kerr. The UK Minister of State for Trade and Investment, Lord Jones, visited Australia in April 2008.
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 650,000 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.
Bilateral Economic and Trade Relationship
Australia and the UK have an extensive trade and economic relationship. The UK is Australia's sixth largest merchandise trading partner, our seventh largest merchandise export market and our seventh largest source of merchandise imports. The UK remains our top EU trading partner. In 2007-08, two-way merchandise trade was worth around A$16.8 billion. Services trade remains strong, valued at A$4.7 billion in exports and A$4.2 billion in imports in 2007-08, and continues to be dominated by recreational travel in both directions. Transportation and other business services also remain an important component of Australia-UK services trade.
Investment
The UK remains a very important investment partner for Australia and is both our second largest foreign investor and the second largest destination of Australian investment (after the US). In 2007, foreign direct investment by the UK in Australia was worth A$64.0 billion while foreign direct investment by Australian interests in the UK was worth A$27.8 billion.
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 organics. 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.
Trade and investment successes
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; Rio Tinto plc; and Vodafone. Approximately 1,500 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 Ltd and BHP Billiton.
Notable recent achievements in the UK by Australian companies 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 UK since the Royal Courts of Justice in London. And, Oceanlinx – a developer of wave-technology energy winning 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.
Tradeinfo Contacts
If you would like more information on the trade and economic conditions in United Kingdom, please email the Department of Foreign Affairs and Trade: Tradeinfo@dfat.gov.au
Last reviewed date: 02/12/2008