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Uncertainty over how a no-deal Brexit will impact New Zealand

Author
Newstalk ZB, NZ Herald,
Section
Audio,
Publish Date
Thursday, 14 March 2019, 5:46p.m.
A no-deal Brexit was ruled out by UK politicians this morning. (Photo / Getty)

Senior ministers are playing down the negative impacts of a no-deal Brexit on New Zealanders, after more drama over Britain's divorce from the EU unfolded earlier today.

However, a partner at accounting and consultancy firm Grant Thornton, Mark Hucklesby, warns that New Zealand businesses will need to assess what the impact could be. 

Although British MPs this morning narrowly voted against leaving the European Union without a deal, there are just 16 days before the UK is scheduled to leave the 28 nation bloc.

In the past, British MPs have rejected Brexit deals brought before Parliament by Prime Minister Teresa May.

As such, questions have been raised as to whether a deal could be reached in that short timeframe.

However, it has been reported the EU is likely to extend the deadline.

Hucklesby told Larry Williams that Brexit is a highly dynamic situation without a clear direction, but that local businesses doing activity in the UK and Europe will have disclosure requirements in their financial statements.

"Clearly, with customs and tariffs and VAT, those rules which have been in place for a number of years, those rules are highly likely to change, and that is something people will need to get the detail on to report back to their New Zealand shareholders."

He says businesses should focus on what they know rather than what they don't know. 

Hucklesby feels that the UK's commitment to New Zealand exporters is a reassuring sign. 

"If there is a no-deal Brexit, there will be no transition and they twill be straight into world trade organisation rules and regulations, something that we have a great deal of expertise in." 

Speaking in the House today, Finance Minister Grant Robertson said Treasury's assessment was that a no-deal Brexit would likely have a small overall impact on the New Zealand economy.

The main impact would be mainly due to the disruption of New Zealand businesses and industries, he said.

UK tourist numbers could fall, Robertson said, and Kiwi goods could be at risk of facing delays at the border.

Importers of Kiwi goods in the UK could face disruptions, he continued.

But as there is no clear outcome to the Brexit process, Robertson said the Government would continue to monitor and plan for "all contingencies".

Both the UK and New Zealand's Government have publically signalled their intention to negotiate a "high-quality" comprehensive bilateral free-trade agreement, once the UK is in a position to do so.

Meanwhile, the UK Government has outlined a pricing regime which details what would happen in the event of a no-Brexit deal.

Although the documents show almost tariffs on 90 per cent imported goods could be slashed, import taxes on beef, lamb and dairy would not be changed.

This would be an attempt to support UK farmers and producers of such products, the Government said.

Asked in the House about this issue, Robertson said New Zealand was "not alone in having concerns about this issue".

"We are continuing to raise them both in the European Union context and in the UK."

Before Question Time today, Trade Minister David Parker said: "Ironically, in the short-term a no-deal Brexit would probably be good for New Zealand exporters".

Asked if he had any advice that exports, such as meat or dairy, would be worse off, he said no.

"We already have backstop phytosanitary agreements that would enable the entry of New Zealand products into the United Kingdom based on interim rules that have already been agreed."

But he said problems in the UK economy would cause issues everywhere including, to some extent, New Zealand.

"But I wouldn't want to overstate that."

 

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