Scott Morrison has said the UK’s vote to leave the European Union has had very little immediate impact on Australia’s economy, and the global financial system has withstood the shock well.
The treasurer said the economic impacts in the short and medium term would be concentrated on the UK economy, though some spillover negative effects would be felt in Europe.
He released a report from the Council of Financial Regulators explaining why Australia had escaped any serious negative shocks from the Brexit vote.
The Council of Financial Regulators comprises the heads of the Reserve Bank, the Treasury, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.
The report said “monetary and fiscal policy options remain available” if the Brexit vote sparked further economic shocks.
Morrison had asked the council, in the days before the 2 July federal election, to prepare a report for the incoming government on the likely consequences of the Brexit vote for Australia’s economy.
The report concentrated on the likely short-term impacts of the vote.
It said authorities would not have a clear idea of the long-term effects on the global economy until Britain officially left the EU and renegotiated new trade deals.
“The global financial system has withstood the event well,” the report said. “Council of Financial Regulators agencies, including through their overseas footprint and Australia’s diplomatic network, were quick to gather international intelligence and coordinate around the Brexit decision and will continue to monitor Brexit-related developments.
On Thursday the shadow treasurer, Chris Bowen, called on the government to publish an update of its budget forecasts within the next three months to account for the recent falls in commodity prices and other negative changes in the global economy.
The council’s report warned that Australia’s economy might be affected by Brexit if the UK transition out of the EU was not orderly, and if uncertainty “remains heightened” for a significant period.
“This poses some downside risk to the domestic outlook, with negative wealth and confidence effects having the potential to affect household consumption and business investment,” the report said.
Morrison will attend the G20 finance ministers meeting in China on Friday, where he expects Brexit will be a key topic of discussion.
“I will have the opportunity to meet with many of my colleagues there, including the new chancellor of the exchequer, Philip Hammond, on the sidelines of those meetings, as well as with other members of the European Union, to get a better understanding of how they are responding and seeing how these events play out,” Morrison said.
