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Risk and opportunity for NZ from UK vote

NZ NewswireNZ Newswire 24/06/2016

There are fears the UK's vote to exit the UK will slow New Zealand's battle to lower trade barriers and slow the flow of British tourists but there may also be opportunities.

The pound has plunged to its lowest level since 1985 on the vote.

This along with higher interest rates and lower growth in the UK may mean fewer UK tourists will come to New Zealand, business leaders say.

Also, exporters must now contemplate how trade deals will change.

"Our goods exports to Europe are already highly tariffed and New Zealand exporters are hopeful of changing this with a NZ-EU free trade agreement as soon as possible. Britain's exit from the EU could slow this process down," says ExportNZ executive director Catherine Beard.

Still, New Zealand is increasingly trading with Asia and Australia rather than the EU and Britain.

"Thirteen per cent of our food exports go to Europe while 50 per cent go to Asia," Ms Beard says.

Federated Farmers is urging diplomats and export companies to be first in line for meetings to push New Zealand's trade agenda.

"Britain leaving the EU will create a considerable degree of political and financial uncertainty but we must consider what new opportunities might be won," Federated Farmers President Dr William Rolleston says.

"This could be a great opportunity to work with lamb producers in the UK to get better outcomes for both countries."

Dr Rolleston said New Zealand needs to emphasise its shared history with the UK and "common thinking".

New Zealand must "remind Britain we are an important ally".

The vote suggests a significant threat against the trends of globalisation and trade liberalisation, Dr Rolleston says.

"New Zealand as a small open economy will be a loser if protectionism prevails," says.

When Britain entered the European Union 43 years ago 40 per cent of New Zealand's exports went to Britain.

In the 1950s more 80 per cent of New Zealand exports went to Britain.

The New Zealand dollar tumbled more than 3 US cents, or 4.4 per cent, and swap rates dropped as the UK voted to leave the European Union, confounding the predictions of bookmakers and pollsters.

Still, New Zealand's financial markets have been relatively unscathed in the fallout from the Brexit. The South African rand and Japan's Nikkei 225 Index tumbled more than 7 per cent, while New Zealand's S&P/NZX 50 Index has fallen 2.3 per cent.

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