‘Very fragile' state of European Union ahead of Brexit vote could have major implications for Australia

A LOOMING vote overseas is being compared to “dangerous moments” in history. It will have a huge impact on Australia.

Supplied photo of an Australian passport Picture: Supplied

EUROPEAN Council President Donald Tusk has given his strongest warning yet about the “very fragile” state of the European Union, comparing it to the days leading up to the First World War that took the continent by surprise.

“It is very similar to some very dangerous moments in our history. You know what I mean. It’s like the day before World War I,” Mr Tusk said about the upcoming referendum on whether Britain should leave the European Union, dubbed the “Brexit”.

He said the migration crisis has provided the “worst political context” for the in or out vote that is expected to take place in June.

As Mr Tusk meets with key European leaders to shore up support for his plan to avoid a Brexit, here’s what you need to know about the vote that could have big implications for Australia.

Prime Minister David Cameron is facing opposition from MPs within his own party who want to vote to leave the European Union. Picture: Stefan Rousseau

IS BREXIT ON THE CARDS?

European leaders will meet next week to finalise terms of a deal that will redefine the UK’s relationship with the EU on key issues like the Euro, border controls, taxpayer bail outs and legislation.

It comes ahead of a referendum when the British public will vote on whether to remain part of the 28-member bloc home to 500 million people.

In the UK, big budget campaigns have already begun to mobilise on either side of the debate. Vote Leave and Leave. EU, argue Britain is better off without the red tape EU membership brings, while Stronger In Europe claims being part of the bloc provides better security, relevance and economic strength than going it alone.

For Australia, where the EU is the largest source of foreign direct investment worth nearly $170 billion annually, with trade worth an additional $84 billion, it’s a critical vote that could affect everything from exports to travel arrangements and visas.

It follows an Australian High Commission report warning the UK bond is already at risk of being “undermined” by a host of visa changes that could make it more difficult for Aussies who want to live and work in Britain.

If the UK does vote to leave it could mean a significant reworking of Australia’s relationship with the UK. Picture: AFP/Justin Tallis

WHAT WILL IT MEAN FOR US?

Global Europe Centre director Richard Whitman said while Britain voting to leave is still an “unlikely proposition”, support has been growing. A recent poll by The Times suggested 56 per cent of people support a Brexit — the highest level in two years.

Mr Whitman said it could mean renegotiating trade relationships and the implementation of a new bilateral relationship with the UK if it was to leave, although the EU relationship would remain stable.

“In a way that’s fairly straightforward on the Australian side but pretty complicated on the UK side, the disruptive effects to Australia would be fairly minimal,” he said.

Australians in the UK who wanted to move into the borderless Schengen zone could also find these arrangements subject to change. There is also the potential the UK could adopt an Australian-style points based immigration system which could prove an asset for those from Commonwealth countries, he said.

Businesswise, a Brexit could make Ireland more attractive to those wanting to invest in Europe as being based in London would no longer mean automatic access to the single market.

It could also have political ructions across Europe and trigger a second referendum on Scottish independence after the country narrowly voted to stay in the UK this year. Fifty four per cent of Scots are expected to vote to leave Britain if the UK opted out of the EU, a poll of 1000 people this week showed.

David Cameron was accused of scaremongering after warning this week that migrant camps like those in Calias could pop up in Britain if UK border checks are removed from France. Picture: AFP/Philippe Huguen

TIGHTROPE FOR CAMERON

For UK leader David Cameron, the upcoming vote means walking a tightrope between Eurosceptic MPs within his own party and European leaders not wanting to compromise the integrity of the European project. Meanwhile, UK businesses are operating in an environment of uncertainty and will be forced to warn shareholders of economic risks Brexit could provide in the upcoming reporting season.

Earlier this year Mr Cameron said he wants to stay part of Europe with guarantees the UK would be able to keep the pound without disadvantage, be exempt from contributing to a European army or taxpayer funded bailouts and have the ability to block Brussels legislation that don’t suit the UK.

“I’ve always said the best answers to those questions can be found within a reformed European Union. But let me say again, if we can’t secure these changes, I rule nothing out,” he said.

The Australian government is yet to comment on the issue.

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