Poor old Britain.

Australia, having run out of sports to beat their former colonial masters in, has just thrashed them in the Eurovision Song Contest.

Quite why Australia, which came second behind Ukraine, was allowed honorary European status is not clear, but the whole thing has always been a bit mad.

I mean that the song contest is mad, although I'd be understanding of readers who thought I might have meant Europe. It's always been a bit mad too.


Now, continuing that theme, the British might quit it altogether.

Ukraine's Jamala smiles as she shows her trophy at a press conference after winning the 2016 Eurovision Song Contest final. Photo / AP
Ukraine's Jamala smiles as she shows her trophy at a press conference after winning the 2016 Eurovision Song Contest final. Photo / AP

It has been overshadowed here by the even madder US Presidential Primaries, but the British exit - or Brexit - remains a real possibility.

With the vote next month, about 40 per cent of Britons want out according to latest polls - that's almost neck and neck with those who want to stay.

Given that almost no one with any economic credibility thinks leaving is a good financial move for the country, it represents an increasingly serious concern.

In its latest warning, ratings agency S&P says a Brexit would hit confidence, investment, exports and GDP and have a "serious effect on public finances". A credit ratings downgrade would be inevitable.

Unfortunately for those who understand the importance of the UK sticking with Europe, the Brexit camp now has its own Donald Trump-like figure in former London Mayor Boris Johnson.

This weekend Johnson went the full "Trump" comparing European bureaucrats to Napoleon and Hitler an interview with the Daily Telegraph.

They might have "different methods" he generously conceded but they all have the same aim, Europe under a single Government.

The politics of Brexit appear to be very much the politics of xenophobia and fear.

Ironically much of the grass roots aversion to European membership in Britian has to do with Germany's quite generous and open attitude to immigrants and refugees.

The politics of Brexit appear to be very much the politics of xenophobia and fear - reactions that it appears to be all to easy for rogue public figures to stir up these days.

From a distance it looks like a right old circus and from New Zealand it is a lot easier to laugh about now than it might have been a couple of generations ago.

Though its flag still adorns ours and its monarch still heads our state, the UK is just our sixth largest trading partner and our fifth largest food and beverage export market.
According to NZ Trade and Enterprise exports were worth about $1.35 billion in 2014 - about $614 million of that was meat and about $320 million was wine.

It's not insignificant but we're certainly not dependent anymore, on the basis of those numbers.

In fact there might even be some trade upside if Britain left the EU as it would have to quickly secure new trading partnerships. It might also be unable to afford the kind of agricultural subsidies that are currently maintained by Europe.

NZ is embarking on free trade agreement discussions with The EU.

On his recent visit to the UK Barack Obama warned that Britain risked exclusion from this deal if it left Europe.

Trade isolation is one of the risks Britain faces if it goes it alone.

But given that British enthusiasm for Kiwi lamb and wine is unlikely to plummet or soar one way or another, these may be marginal concerns for New Zealand exporters.

More immediately there is the risk of global market turmoil a Brexit might bring.
Britain is still the world's fifth largest economy and a financial market hub.

The fallout would surely spill to the already fragile European banking system and would certainly put more uncertainty in the minds of those monitoring global financial risk - most notably the world's central bankers.

Another round of European banking turmoil would give the US Federal reserve pause for thought on rate hikes and our own Reserve Bank more to worry about as it considers further rate cuts.

Europe's economy is still weak and quite where its central bank goes from negative interest rates is not quite clear.

Meanwhile, rates in the UK are just 0.5 per cent and the Bank of England hasn't moved them since 2009.

To the extent New Zealand is part of a globalised economy we can't avoid the kind of currency and interest rate impact that more uncertainty in Europe would bring.

The final weeks of campaigning in the UK are going to be fascinating and quite possibly as mad as the weekend's Eurovision spectacular.

Still as a metaphor for its place in Europe the glittery annual song competition offered one small and familiar consolation for the Brits. They managed to beat Germany, who finished dead last.

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