The trade relationship between Australia and the United Kingdom is long-standing, steeped in history and mutually significant. It is also undergoing a metamorphosis.
Australia is seen by the UK as a key trading partner post-Brexit, and the upcoming Australia-UK Free Trade Agreement will provide Australian exporters with new opportunities, including primarily through the removal of tariffs.
The UK is our eighth largest two-way trading partner and mining continues to dominate, with gold, lead and gems still among Australia’s top ten export to the region.
But the UK is increasingly looking for Australian participation in its “New Economy”- Great Britain and Northern Ireland’s high-growth, high-tech industries.
Opportunities abound for Australian exporters
Negotiations for the Australia-UK Free Trade Agreement (FTA) kicked off on 17 June 2020. Ms Jennifer Mackinlay, Austrade’s Senior Trade and Investment Commissioner- UK, Ireland and the Nordics, says the FTA is an opportunity to deepen the trade and investment relationship between the two countries.
Austrade has identified fintech as a growth sector for Australian exports, pointing to the UK-Australia Fintech Bridge which was signed almost three years ago.
“The UK-Australia Fintech Bridge has facilitated high levels of regulatory cooperation, the sharing of best practice strategies and promoted two-way trade and investment flows for Australian and UK companies,” says Ms Mackinlay.
“Both Australia and the UK are focused on continuing to grow attractive, innovative and competitive fintech ecosystems that support growing businesses and promote the integration of new technologies across financial services.
“The Fintech Bridge continues to play an important role and is complemented by the Australian Government’s $9.6 million investment in the sector, to support the international engagement and expansion of Australian fintech companies and further foreign direct investment in the Australian fintech sector,” she continues.
Ms Mackinlay observes Australian fintech companies are active in payments, lending and digital banking but also in other subsectors such as regtech looking at opportunities in the UK.
“Australian fintech companies are attracted to the UK as it is a leading global fintech ecosystem borne out of a leading international financial services sector, combined with a strong consumer appetite for innovative products and services and a regulatory environment that strongly supports innovation.”
Another emerging and potentially lucrative industry for Australian exporters is cleantech, businesses utilising technologies to improve environmental sustainability.
In November 2020, the UK Government released its Ten Point Plan for a Green Industrial Revolution consisting of £12 billion (A$21.6 billion) of government investment to make the UK a global leader in green technologies.
“Opportunities exist for Australian cleantech companies developing the next generation of new energy solutions and technologies,” explains Ms Mackinlay. “There is strong interest in green hydrogen and renewables, flexible energy services, battery storage and battery technologies that support the shift to zero-emission vehicles.
“Australian companies with this expertise are well placed to contribute to the UK’s Ten Point Plan and partner with industry on lowering net-zero emissions in the UK.”
Emerging industries to watch
Australian companies should consider emerging opportunities in the fields of cybersecurity and artificial intelligence (AI).
Australia is home to an advanced cybersecurity industry, with businesses and researchers developing the next generation of products and services, which allow users to live and work securely in an increasingly connected world.
Being a member of the Five Eyes intelligence alliance presents an advantage and opportunity for Australian cyber companies who can demonstrate capability and offer solutions to problems like cyber deception.
“In January 2020, the UK’s cyber security industry was reported to be worth an estimated £8.3 billion ($A14.8 billion), with total revenues in the sector increasing by 46 per cent from £5.7 billion ($A10.2billion) in 2017,” Ms Mackinlay explains. “This growth can be attributed to the UK’s world-leading technology sector, pro-innovation regulation, research and business-friendly environment and private and public sector support.
“Although it’s a competitive market with leading global operators, such as Sophos and Darktrace, the market is open to new entrants. Australian companies like Huntsman Security are successfully operating in the UK and providing services and solutions to industry, government and defence and security agencies.
“Canberra-based cybersecurity company, Quintessence Labs (QLabs), which implements security strategies to address complex security challenges facing organisations, including data protection, is another company doing business in the UK.”
In December 2020, QLabs CEO, Vikram Sharma, said, “The UK and EU are globally significant markets for cybersecurity and strong, seamless trade agreements with our international partners are key to the successful and cost-effective export of our products. We strongly support the FTAs with the UK and EU – they will drive the acceleration of the growth of our exports to these important markets.”
In January 2019, Paul Drayson said Britain needs to step up to win the global AI healthcare race. Lord Drayson is a former science minister and chief executive of Sensyne Health.
The UK is recognised as a leader in technology for health and one of the leaders in AI in Europe. It is looking to scale up the AI industry and harness the benefits of technologies that transcend multiple sectors such as health and medical technology.
Ms Mackinlay says this creates an attractive opportunity for some Australian companies.
“One such company is Alcidion, which is developing AI technologies for the health industry,” says Ms Mackinlay. “The Australian Stock Exchange listed Alcidion recently signed its largest UK deal to date, with South Tees Hospitals NHS Foundation Trust becoming the second NHS trust to procure Miya Precision.
“Miya Precision integrates information from NHS Trusts’ current systems and uses it to automate routine tasks, care plans and pathways. Alcidion’s technology combines AI and real-time health informatics to consolidate information from different sources into one easy to read platform for clinicians.”
Preparing to enter the UK market
For many Australian companies, the UK is a comfortable export market. There are no language barriers, we are culturally similar, and the UK can be viewed as a discrete market or a launch-pad to Europe.