Brexit - what does it mean for New Zealand?

Punters at the Ascot Races in Brexit themed costumes (Getty)
Punters at the Ascot Races in Brexit themed costumes (Getty)

Economists say if Britain leaves the European Union it will cause headaches for New Zealand firms.

But they also caution that is extremely difficult to say exactly what the impact could be.

The New Zealand Institute of Economic Research says: "The post-Brexit picture is horribly murky. No one knows how it might play out, especially after the two-year withdrawal period lapses."

The most obvious impact would be on New Zealand's exports to the UK, which could drop by $190 million per year.

To put that figure in perspective, New Zealand currently exports around NZ$1.7 billion of goods each year to the UK (including sheep meat, wine, apples, pears, wool and honey). Britain accounts for 3.4 percent of New Zealand's goods exports.

There have been multiple studies on both sides of the argument on how the UK economy might be impacted.

The Institute says those studies show the UK economy could slow by between 1.3 percent to 5.5 percent of GDP by 2020 and between 1.2 percent to 7.5 percent in 2030.

"Slower income growth is likely to dampen the demand for our tourism exports, as UK travellers may well postpone long-haul travel until economic conditions improve."

New Zealand earns NZ$1.6 billion in services each year from the UK market (mainly tourism-related, but also legal, advertising, architecture, engineering and audio-visual services).

The UK exports around NZ$1.3 billion worth of products to New Zealand each year (vehicles, engines, machinery, spirits and books).

New Zealand imports NZ$970 million of services each year (tourism, insurance, broadcast rights and business services).

Proponents of Brexit say the UK will be able to lower administrative costs for smaller firms and will be able to negotiate a new trade deal with the EU.

But these claims are contested by those who want the UK to remain within the European Union.

Newshub.

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