Why Australia can help Brexit Britain to find its feet

by Peter Mandelson, Global Counsel Chairman

Last year's Brexit referendum was not the British political elite's finest hour. Those on the Remain side failed to convince a majority of voters to support a project that has helped deliver prosperity throughout Britain since joining in 1973 and peace across Europe since the 1950s. While the victorious Leave campaign drew on arguments that even their supporters now admit relied on telling "porky pies" and deploying a strategy that was "a little bit racist".

Memories of the Brexit referendum remain both fresh and painful for me personally – mea culpa, I was an active member of the Remain team. Throughout the campaign the most vocal advocates backing Leave, many now representing the British government as it negotiates our divorce from the European Union, suggested that there was a bright new future for Britain as a global trading nation. Our imperial past, the Commonwealth's unique network and our ties to countries like Australia, they argued, were all we needed if only we cut ourselves loose from the bureaucrats in Brussels and embrace this new Jerusalem.

Next month I get to test this thesis in person when, to my shame, I will visit Australia only for the first time. As Europe's trade commissar I worked very closely with Australia's crack trade negotiators. Now I can understand first hand whether the shared history that Britain enjoys with Australia is the basis for a common and prosperous future as Brexit becomes a reality.

Even without the benefit of setting foot on Australian turf, I suspect that the Brexit campaign drew on a stereotypical view of the Anglo-Australian relationship which is not borne out of reality. In Britain we still struggle to understand that Australia is a very different country to the one that we turned our backs on when we favoured a deeper relationship with Europe in the 1970s. Any new trading partnership between Britain and Australia is going to reflect the fact that Asia not Europe now sets the political compass in Canberra: a statement of the obvious to readers in Sydney or Melbourne, but still a surprise to some in Whitehall.

If Britain is to seize what opportunity Brexit provides us, it must not be a regulatory race to the bottom on standards; there are many countries, some near neighbours to Australia, who will do that with more efficiency and scale than we can. The answer has to lie in an even greater focus on Britain's competitive advantages and high value content of the goods and services it has developed since the Thatcherite industrial upheaval in the 1980s and Blairite reforms in 1990s and 2000s.

Strong knowledge base

As business secretary for two different periods under Tony Blair and Gordon Brown, I had a front row seat as these industries grew. What unites all these sectors, from finance to technology, pharmaceuticals to architecture, is a strong knowledge base and ability to scale at speed. In the blizzard of trade missions that the British government have undertaken since the Brexit vote, they have rightly showcased opportunities in anything from fintech to renewables. To turn these meet and greets into reality will require heavy lifting from business and policy makers rather than more diplomatic cocktail receptions. The politicians are going to have to offer a policy framework that supports the partnerships of the future, from common standards in financial services through to ease of access for university students to study in Britain. Corporate leaders are going to have to commit time, innovation and capital to future-proof their business against lower cost competitors.

I suspect there is also much that we can learn from Australia's own island story, especially understanding how its economy benefited from the opportunities being created in fast-growing neighbouring Asian markets. Ironically, part of the Australian success story has been the extent to which immigration from both continental Europe and then more recently China and India has helped the reshaping of the country's economic priorities but not its national identity. In Britain, we will have to realise that we cannot be more open to the global economy while simultaneously closing our borders to talent from abroad.

I worked hard to avoid Brexit. If it could be stopped I would help stop it, but the people have spoken and that has to be respected. Regardless, all the signs are that it is going to happen whatever I might think and however badly the exit negotiations are going now. Which means Australia has a chance to help us make a success of it. The British need to convince our Aussie cousins that we are worth the effort. When I get to Melbourne and Sydney, I hope to understand whether Australia is up for it and whether this really is going to be the beginning of a renewed, closer relationship between our countries.

Peter Mandelson, chairman of Global Counsel, will be visiting Australia at the beginning of October as part of a client program co-ordinated by global law firm, Herbert Smith Freehills.

Article published by the Australian Financial Review on 26 September 2017.