NZ-UK Free Trade Agreement: Good news for both sides

In an update to the progress being made on the Uk's Free Trade Agreement (FTA), an agreement in principle has been reached.

Analysts at ANZ bank explained that negotiators now have to agree on the final text, the agreement needs to be signed, and finally ratified before coming into force.

''The FTA is expected to have greater economic benefits for New Zealand than for the UK, but the agreement does provide a path for the UK to gain better access to Asian markets,'' the analysts said. 

''The in-principle agreements reached by New Zealand and Australia for their respective FTAs with the UK are very similar.''

Market implications

Prime Minister Boris Johnson said the deal will cut costs for exporters and open up New Zealand's job market to UK professionals.

However, the New Zealand deal itself is unlikely to boost UK growth, according to the government's own estimates and only a very small proportion of UK trade is actually done with New Zealand, (less than 0.2%). Therefore, this is unlikely to move the needle when it comes to the pound.

However, it could be more favourable to New Zealand. Analysts at ANZ Bank said ''initial modelling by the UK suggests the agreement could result in a 40% increase in NZ exports to the UK and a 7.3% increase in UK exports to NZ. 

Overall, it's positive news for both sides, especially given the UK's recent breakup with the EU. This deal also ''provides a pathway to improving economic ties between the UK and Asia as this agreement is seen as a step towards accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),'' the analysts at ANZ noted.