Why a 'Brexit' could cost New Zealand $190m

(iStock)
(iStock)

The polls are tied, the lobbying has reached its crescendo and now Britons get to decide on whether they want to perhaps cost New Zealand $190 million.

That's one scenario being offered if the UK leaves the EU.

The UK's Treasury has done its sums on the economic impact to Britain and come up with two scenarios: a "shock" or a "severe shock". Either way Britain slips into recession.

Which means the Brits buy less.

The New Zealand Institute of Economic Research (NZIER) says the only certainty of a Brexit is uncertainty.

However, it's done its best to do the maths and come up with a forecast $190 million drop in export earnings.

Is that significant?

NZIER deputy chief executive John Ballingall says the UK is our fifth largest trading partner. Exports including wine, sheep meat, and tourism are worth 3.3 billion dollars.

"We can expect the first two years, when the UK is negotiating its withdrawal from the EU, to be very uncertain. And after that there will be another period of uncertainty as the UK seeks to have arrangements with other countries," Mr Ballingall says.

Winemaker Villa Maria's Chief Operating Officer Richard Thomas says the UK is the company's biggest market.

"I think we would probably say we would rather Brexit didn't occur at the moment buts it's a political thing and we don't get involved in what British people choose to do in a political sense," says Mr Thomas.

"I think we are worried about uncertainty just like any other exporter to the UK is worried about uncertainty."

Villa Maria says it's been trying to secure its place in the market ahead of the vote, and has tried to hedge its currency.

It also has a simpler business plan.

As Richard Thomas says, if people celebrate they do it with wine. If they commiserate, they do the same.

The two main reasons again boil down to the economy and immigration:

Immigration

The 'Leave' camp's main argument here is that increased EU migration has forced the UK Government to clampdown on non-EU migration and that's making it harder and more expensive for Kiwis to live in the UK. The 'Remain' camp says there's no way that if the UK leaves it will suddenly fling its doors open to NZ and the Commonwealth.

Trade

John Key says the UK is stronger in Europe and should stay, that NZ wants a trade deal with Europe and that would be affected by Brexit. On the other hand, Winston Peters who's for 'Leave' says focus should shift from the EU to the Commonwealth. He says NZ and the UK would be better off with a Commonwealth free trade agreement that wouldn't be dictated by Brussels red tape.

Voting

A lot of Kiwis can vote - any New Zealanders living in the UK longer than 6 months can vote and the 250,000 Brits living in NZ can too, as long as they've registered to vote in the UK in the last 15 years (though if you haven't registered for the referendum by now it's too late).

Newshub.

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