Prime Minister Scott Morrison has assuaged fears that the Australian economy will be negatively impacted by the ongoing Brexit debacle.

The PM has confirmed that Australia's trade relationships with Britain and the European Union are in safe hands after Brexit plans plunged into chaos in the UK parliament.

British Prime Minister Theresa May narrowly survived a no-confidence motion overnight, by 325 votes to 306. This follows the defeat on Wednesday Morning of her deal for the UK to leave the EU - which dealt a devastating blow to her government.

Following the latest vote, the Commons Brexit committee in the UK parliament has issued a report calling on MPs to be allowed indicative votes on four basic options they wish to support:

  • another vote on the draft deal
  • a no-deal Brexit
  • an attempt at renegotiation with the EU, or
  • a second referendum

Morrison said Australia had been working since the UK referendum to ensure market access to Europe and Britain under current arrangements and into the post-Brexit future.

"Australians should feel reassured that a safe and steady pair of hands has been managing what is a very uncertain and unstable set of arrangements," the Prime Minister told reporters in Vanuatu on Wednesday.

Scott Morrison

PM Scott Morrison insists Australia won't be unduly affected by Brexit dramas

Morrison said while the direct economic impacts on Australia were limited, the situation highlighted uncertainty in global trade which needed strong domestic financial management.

Morningstar Investment Management's head of multi-asset portfolios in Europe, Mike Coop, says the various potential outcomes on Brexit means investors are concerned about what could happen in the near term.

"But it is worth remembering that the major global economies of the US, Europe and China will have a major impact on what happens to both UK equities and UK gilts.

"UK equities get the majority of their revenues from outside the UK, but because of Brexit they have been shunned, meaning valuations are now attractive compared to other equity markets," he says.

Coop points to the "long term valuation lows" of the British pound as an opportunity - something his counterparts in Morningstar Investment Management Australia are reflect in their local portfolio allocations.

“For investors who can afford to take a long term perspective, we think UK equities and the pound are attractive if you can look past the political noise, and you should be careful about your exposure to UK government bonds," Coop says.

Belt and braces approach to Brexit

Australia's Federal Trade Minister Simon Birmingham said the government had a "belt and braces" approach to Brexit, with negotiations ongoing with the EU and a working group established with the UK to keep trade ticking along.

"These are quite extraordinary and uncertain times," he told ABC Radio National on Wednesday.

"It could lead in any number of directions it seems from here, with just 73 days to go now until the scheduled date for Brexit to take effect."

Opposition Leader Bill Shorten said the uncertainty was bad for the British people, but urged Australia to focus on trade opportunities.

"I think what we've got to do is make sure we maintain good relationships with Europe and with Britain, and we get the advantages we can for our businesses," Shorten told the Nine Network.

He said if elected prime minister he could work with either May or Opposition Leader Jeremy Corbyn to advance Australian interests.

Following the latest vote, the Commons Brexit committee in the UK parliament has issued a report calling on MPs to be allowed to give indicative votes on four basic options they wish to support: another vote on the draft deal, a no-deal Brexit, an attempt at renegotiation with the EU, or a second referendum.

The date set in law for Britain to leave the EU - March 29 - now looms, with Britain's government deeply divided over whether the country should leave Europe, and how to do it.