The Treasurer today released the Council of Financial Regulators (CFR) report of 7 July to the Government on the economic implications of the United Kingdom’s (UK) vote on 23 June 2016 in favour of exiting the European Union (EU).
The report reflects the consolidated view of the CFR agencies: the Reserve Bank of Australia; the Australian Prudential Regulation Authority; the Australian Securities and Investments Commission; and the Treasury.
It re-affirms that Australia is well placed to manage the economic and financial market repercussions from Brexit.
The effect on the Australian economy, and on our financial sector, is expected to be small. This reflects the likely limited impact of Brexit on global activity, Australia’s trade links being oriented more towards Asia than Europe and the limited direct exposure of Australian banks to the UK and Europe.
The report also notes that if the UK transition out of the EU is not orderly and uncertainty remains heightened for a significant period, then this would pose some downside risk to the domestic outlook.
As noted in the report, events such as Brexit underscore the importance of pressing ahead with the Government’s reforms to enhance the resilience of the Australian financial system that were adopted in response to the Financial System Inquiry.
They also emphasise the need to support international efforts to strengthen financial stability and address risks.
The Treasurer’s attendance at the G20 Finance Ministers and Central Bank Governors Meeting in Chengdu on 23-24 July 2016 provides an occasion to do so. It is also an opportunity to encourage a constructive approach by the UK and the EU to arranging the UK’s exit.
The report is available on the Treasury website.