David McCredie, the CEO of the Australian British Chamber of Commerce, talks with Ross Greenwood about the U.K election and the impact on Australia.
Introduction – UK Election 2017, impact on Australia
Ross Greenwood: Welcome back to money news right around Australia. I did mention that there are things that can disrupt markets that are happening tonight. You’ve got James Corbyn giving evidence that will potentially incriminate the US president. You’ve got the UK general election. Now the British general election tonight given what happened in the brexit vote when it was broadly expected that the UK would stay inside the European Union and ultimately did not.
Think about the shockwaves, that sent through the UK short term. Longer term, the UK stock market has regained its poise and has risen rather strongly off the back of it. What happens tonight? A good man in a great position because also remember that Australia’s talking about free trade agreements with the UK right now, Dave McCready is the chief executive of the Australian British Chamber of Commerce looking at British businesses here in Australia.
But also Australian businesses in the UK is with me now. Good day David, how are you travelling?
Interview with Dave McCredy
David McCready: Very well Ross. How are you?
Ross Greenwood: Good thank you. Do you reckon plenty hinges on this election tonight?
David McCready: Yes, look absolutely. I think you’ve got two very different manifestos in play from the big party. You clearly have the Lib Dems as a third option who are looking at trying to reverse brexit if at all possible. Then the complications of the SNP, Northern Ireland, other places. It’s going to be a fascinating morning tomorrow the results come through.
Ross Greenwood: Why is it therefore that subsequently after the brexit vote where everybody is most concerned about UK falling into recession, the whole place had fall apart off the back of that. The stock market has boomed, the economy seems to be in reasonably good shape in regards to confidence and so forth. You could argue that their business confidence especially is a little better than what it is here in Australia.
David McCredy: Yes, look I think that’s probably fair assessment. I guess one of the great things that the UK had always managed in terms of staying out of the euro was that floating currency. Obviously we’ve seen the pound devaluing, then the stock markets going to go well because foreign investors suddenly are looking at that and going well, “I’m getting a good deal on assets in the UK.” I might load a bit more on those opportunities.”
I don’t think it’s necessarily a huge swell of confidence but certainly they’re traveling pretty well at the moment ,the sterling wasn’t a big hit. Initially first few days there was, but in terms of the big hit to the economy that everybody expected with a vote to leave really hasn’t eventuated as yet.
Ross Greenwood: Let’s be honest here David because from the markets perspective the big shock would be if Jeremy Corbyn got in or indeed if there ended up having to be a power-sharing arrangement with the Liberal Democrats. That would be the big shock to markets and the British economy, to many British business people. That’s not beyond the realms of possibility.
David McCredy: Look it’s not beyond the realms of our possibility, however look I’m going to be careful because I didn’t pick brexit and-
Ross Greenwood: Go on stick your neck out David. Tell me what you reckon.
David McCredy: I was in the UK at the beginning of May. I met with a range of people across the spectrum. The honest consensus was that May would win by 50 seats or more. I know I’ve been judging it from afar over the last week but I haven’t seen anything which would fundamentally make me change my mind on that.
Not even looking at the markets over the last few days. The conservative is a favorite and in fact if you look at the margins, the Conservatives to win by 50 to 75 seats is actually the shortest odds on conservative win if you’re picking the margin. I think that that probably still holds true.
Ross Greenwood: Tell me about the links between Australia and the UK these days? Quite clearly its entrance into the European Union. The one currency which you did not take a part of, but in long term Australia is still had a very strong relationship with the UK from a trade point of view. How would you describe that relationship and the trade links right now?
David McCredy: We’ve always had a strong relationship as you say, for 220 years the UK has been investing in what is now modern Australia to our investment stands at somewhere north of 600 billion Australian two way a trade on an annual basis is over 20 billion. It’s not in insubstantial, it is consequential. It’s obviously not as big in terms of the trading side as we have with our neighbors to the north.
But it is the second largest destination through our investments overseas behind the US. It’s the second largest source of capital for Australia behind again the US. They are very important relationships for between Australia and UK, it’s strong. However, the opportunity beyond a UK exit from the EU is that we can potentially improve that.
We’ve seen about a 40% uptick in the Australian-US relationship in the 12 years that that’s been going on. Why wouldn’t we expect something similar from an arrangement of similar casting with the UK?
Ross Greenwood: It’ll be interesting to see that trade with the UK, free trade with the UK to see whether Australians would embrace it. I think they would, there’s no doubt the links are still very strong and they would be ongoing. There is no doubt the man who’s trying to get all that stuff together, David McCredy who is the chief executive of the Australian British Chamber of Commerce. David as always we enjoy your perspective and thanks for your time.
David McCredy: Always a pleasure Ross.