Despite fierce resistance from the agricultural lobby, the UK looks set to sign a substantial free-trade agreement with Australia, and one that should be a template for deals across the rest of the world. Once that is completed, we should see a lot more trade between the two countries. But we might see something more important as well: a round of takeovers of Australian companies by British ones – because there are lots of tempting targets.
Snap up an airline or a bank
An Australian trade deal won’t, of course, be transformational. Its economy is not huge. With a GDP of $1.4trn, it is about 40% of the size of the UK, and far smaller than either the EU or the US. It is unlikely Australia will be selling us vast amounts of stuff, given the distance it will have to travel. Nor will we suddenly be selling vastly more products to them, for the same reason. It will be a decent market for British firms, yet hardly likely ever to be a crucial one.
Except, that is, in one sense. Right now, there are restrictions on foreign ownership across a range of industries, mainly because of worries that China might buy up the whole country if it was allowed to. A trade deal should remove all of those (if it doesn’t, it should be renegotiated). British businesses should therefore not just be looking at selling goods and services into the market, but at taking over companies there as well. There are five obvious targets to start with.
First, airlines. In line with many other countries, Australia places ownership restrictions on its main national airline. Perhaps that was understandable in the past. Countries used to think it was important to control routes into and out of the country and, in the wake of Covid-19, it is unlikely they will give up on that completely. Even so, a free-trade deal should make a takeover possible. If so, Qantas would surely be a natural target for IAG, which already owns British Airways and Iberia. That really would be a global airline.
Second,…