The Turnbull government will have “to make a deal with the EU” to protect the nation’s $100 billion in “substantial” trade surplus with the bloc, the Treasurer has said.
Key points: Treasurer Scott Morrison says Australia’s $80 billion trade surplus is now about half the size of its current trade deficit with the European Union Mr Morrison said it would be a “difficult decision” for the Government to leave the EU without a deal.
Mr Morrison also said Australia could be forced to move the Federal Government’s financial services portfolio out of Canberra to the new headquarters in Sydney.
He said the Government would have to “make a deal” with the new EU president to protect its “substantially higher trade surplus”.
“We will need to make some difficult decisions,” Mr Morrison told ABC radio.
“There are many, many issues to consider.”
‘We are prepared’ for “significant disruption” Mr Morrison has made a series of statements about the trade relationship, which have included calling it a “golden opportunity” for Australian businesses and citizens.
He has also said the trade surplus could grow to more than $200 billion by 2031.
Mr Hockey says Australia would “absolutely” remain in the European Economic Area (EEA), which includes the 27 countries of the EU.
“The Australian Government will continue to be a member of the European Free Trade Association (EFTA) as a permanent member,” the Treasurer said.
But Mr Morrison says he has not yet discussed a deal for the future of the Australian Government’s $2.5 billion in significant trade surplus.
He told ABC Radio that the Government was “looking at all options” but the trade deficit “is not a question of where we go from here”.
“It’s a question for us to think about what happens with our trade policy and the Government’s approach to the trade policy,” Mr Abbott told the ABC.
“We are looking at a significant disruption.”
The Australian dollar fell to a one-week low on Wednesday and the euro tumbled as investors sought to get a grip on the current uncertainty surrounding the Brexit negotiations.
In a sign of the uncertainty in the markets, the US Federal Reserve raised interest rates for the first time since June.
“In the face of the economic turbulence and volatility in the world, the Fed has announced that it will keep rates at a record low,” it said.
“This decision is intended to support the economy through the uncertainty surrounding negotiations with the United Kingdom.”
Mr Morrison did not directly address the issue of a trade agreement with the eurozone.
But he told ABC TV’s AM program that Australia “will be prepared” to “have a deal”.
Mr Morrison’s comments come amid a push by some senior Government figures to move away from the European Central Bank, a decision which would leave the country with a weaker currency and more uncertainty.
Mr Abbott, the Prime Minister, has made it clear that the government will not accept a “hard Brexit”.
The former foreign minister has said he will not make a “dismissal” from the Government over Brexit and the Treasurer, Scott Morrison, has said Australia would continue to trade with the rest of the world.