What the UK-Australia trade deal tells us about Brexit and leverage
- Talk2EU
- Jan 15
- 3 min read
The UK-Australia trade deal after Brexit
This explainer breaks down why the UK–Australia trade deal is often presented as evidence of what the UK gained after leaving the EU, and why it is often presented as proof that Brexit allowed Britain to strike ambitious agreements outside the EU.
It is worth looking at that claim more closely.
The EU-Australia trade agreement and market size
The European Union and Australia are close to concluding their own trade agreement [2]. When finalised, Australia will gain preferential access to a single market of around 450 million consumers, compared with the UK’s market of around 67 million [3]. That difference in scale is substantial and helps explain why Australia continues to prioritise engagement with the EU alongside its deal with the UK.
Why services and regulatory alignment are important in trade deals
The scope of the UK–Australia deal also matters [1]. It delivered relatively modest gains in services, despite services accounting for the majority of the UK economy. By contrast, Australia’s negotiations with the EU place greater emphasis on services access, regulatory cooperation, and standards recognition. In these areas, market size and regulatory alignment play a decisive role.
Is being first to sign a trade deal an advantage?
This comparison highlights a broader issue in how post-Brexit trade outcomes are often discussed. Signing a deal quickly does not necessarily result in lasting economic benefit. What matters is the balance between what is gained and what is given up.
Australia did not need to leave a single market to negotiate improved access to Europe. It did not introduce new customs processes, rules-of-origin checks, or trade friction with its major partners. It negotiated from outside the EU while preserving its existing trade arrangements.
Trade friction, Northern Ireland, and real-world costs
The UK’s experience was different. Leaving the EU meant accepting new barriers in trade with its largest partner while seeking opportunities elsewhere. Those barriers have had particularly visible consequences in Northern Ireland, where special arrangements were required to avoid a hard border with the EU [4]. This underlines that trade friction is not an abstract concept but something with real economic and political costs.
Supporters of Brexit often argue that the UK gained speed and flexibility in its trade policy. There is some truth in that. However, speed has not translated into greater leverage or uniquely favourable terms in this case. The UK negotiated alone, under pressure to demonstrate quick results, while the EU negotiated as one, with a far larger market and no comparable urgency.
What the Australia comparison tells us about Brexit
Australia is set to deepen its trade relationship with the EU without disrupting existing arrangements. The UK disrupted its closest trading relationship to secure an agreement that others can achieve without similar costs.
That raises a reasonable question for anyone assessing the long-term trade implications of Brexit.
The comparisons between the UK-Australia and EU-Australia trade talks present a good opportunity to assess post-Brexit policy. As debate around Brexit and policy continues, these details are crucial. They affect both announcements and the practical costs and benefits that impact the entire UK economy.
Why did the UK need to give up friction-free trade with the EU to obtain outcomes that the EU itself can achieve without doing so?
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