Trade deal to boost Australian exports to the UK as labour shortages, grocery prices weigh on Brits

Australian exports could play a part in relieving the UK of economic pressures in the months ahead when a new free trade agreement between the two countries comes into effect on Wednesday.

That deal, drafted and signed in 2021, will significantly reduce tariffs on a range of major Australian exports, including wine, beef and dairy, as well as promote the exchange of skilled labour between the two countries.

While the freer movement of workers may benefit businesses in both countries struggling with labour shortages, UK Consul General Tina Redshaw said the agreement’s immediate benefits were likely to flow through in lower priced imports and exports.

“I think what we’ll see is it will become much cheaper for Australian importers to bring onto the market iconic British products, like cars, Scotch whisky or UK fashion brands. But equally, [it] will become easier for Brits to get a hold of Jacob’s Creek wine, Tim Tams, even surfboards,” she said.

“There is no doubt it will bring benefits in both directions.”

Competitively priced goods will be of great value in Australia, where inflation ran at 7 per cent per annum in the March quarter, and will likely be an even bigger relief for UK consumers, who are nowadays struggling with double-digit inflation driven primarily by persistently high grocery costs.

Ms Redshaw said the deal would make it easier for British supermarkets and grocers to import Australian produce, but was reluctant to speculate on whether an influx of low-cost imports would have Britons swapping Marmite for Vegemite at the supermarket till.

“Of course, it will enable more Australian beef and Australian seafood, for example, to hit our supermarkets,” she said.

“Whether or not that will drive down prices is of course another factor, but ... those kinds of goods – and similarly agricultural produce like cheese from the UK, for example – will be easier to export and import,” she said.

Britain’s departure from the European Union in 2020 hastened its need to negotiate new trade arrangements outside of the bloc’s single market, with Australia the first country to sign an FTA with the UK following Brexit.

Australia, which, per the Department of Foreign Affairs and Trade, exported about $7.79 billion of goods and services to the UK in 2021-22, is set to benefit greatly from the deal, which the Federal Government has argued will result in less than 1 per cent of exports to the country being tariffed.

Individuals will also benefit from relaxed visa requirements, with Australians under the age of 35 allowed to stay in the UK for three years if they hold a youth mobility visa.

Ms Redshaw said this would open up work experience opportunities for workers in both countries.

“It’s something that is more than Australia has offered to any other country in this type of free trade agreement, which makes it pretty significant,” she said.