A few quid. Photo credit: hitthatswitch
Kamal Ahmed, the business editor of The Sunday Telegraph, had an informative article in the newspaper’s business section on February 12. It was so pro-active it had my growth antennae twitching. The article was entitled Forget Europe it’s time to go Commonwealth. It immediately attracted my attention because recently the disappointment at the Doha Talks had led British Prime Minister David Cameron to urge setting up trade connections of the ‘willing,’ something I had likened to slicing through the Gordian Knot; and here was an article focused on the Commonwealth Business Council to which a number of emerging markets belong, including three members of the BRICS block.
The Council had been in the news, although not as prominently as Ahmed would like, through the installation of a new director general, Sir Alan Collins, an experienced former ambassador and big business adviser. Sir Alan, the second director since the council’s formation in 1997, heads an important organisation of 54 countries, spread over five continents, sponsored by its members and corporate members, including the Industrial and Commercial Bank of China.
The value of inter-Commonwealth trade is now some four trillion dollars.
The value of inter-Commonwealth trade is now some four trillion dollars and this summer London will host the latest Commonwealth Economic Forum. The Commonwealth Business Forum in Perth last October saw the interaction of 1,400 business and government leaders from over fifty countries.
As the article explained, the UK has long standing connections with Commonwealth markets, many of them emerging, like India, South Africa, Nigeria and Malaysia. Trade’s “golden corridor,” HSBC’s “21st century Silk Road,” is rapidly developing “from Latin America, through Africa to China.” Ahmed sees this as a great opportunity for the UK, which is seeking its role in the “new world order.” The UK has the ties, experience, and financial models to facilitate the great transactions, which the new Silk Road would engender, especially with the City being a major, if not the major, global financial center.
All of which shows why this particular article had my antennae quivering; and when the CBI issued an exhortation to Chancellor George Osborne to get his growth plan moving, it sent me straight back to it.
Now the UK is a member of the EU and Europe is the UK’s biggest and most important market. Germany, in fact, is our second largest individual market after the US, our most significant individual trading partner. So this article took note of that, but I gleaned from it, the concept of setting up several strands of exporting potential, which seemed valid and appealing.
A resurgent relationship with the Commonwealth markets is not a new idea but that doesn’t mean it’s a bad idea.
This is not necessarily a new idea. Economic strategy is being constantly debated at the present time and others have put forward the premise of a resurgent relationship with Commonwealth markets, but this exposition gained the attention and held it. It promised growth, a term on everyone’s lips, especially in those countries with large deficits. Some countries, notably the US, have a more straightforward path. The US is the foremost global economy and reserve currency. It’s role is clear: thrive for your own sake and everyone else’s; and with between 2 and 3 percent growth rate forecast for 2012, unemployment figures falling encouragingly and a deficit reduction plan of some four trillion dollars now before Congress, the country is on the right path to doing that.
The UK’s case is more complicated. It requires a comprehensive growth strategy to balance the vital deficit reduction plan, now in progress. Reduction must stay on course, but it should be ensured and accelerated by working with business and achieving increased growth. Many of the growth measures are either already in place, or on the cusp. A plethora of paid-for and corporate funded major infrastructure projects have launched, or are pending. I’m following several in my own area. Another £50 billion tranche of QE is in place, inflation is falling as forecast, now 3.6%, corporation tax is being cut, house repossessions are noticeably lower, house building targets are being met, and although Merlin’s lending targets were not, in net terms, they have set the procedure moving and if lending conditions are eased, it should improve results.
In the meantime, Credit Easing is due to start shortly through the National Loan Guarantee Scheme. Some twenty billion pounds will be directed to where the SMEs need it. In addition the UK is pushing for the completion of the Single Market, which would invigorate the EU, and arguing forcefully against over-regulation, which would hamper it. Imagine adding to all these growth measures the huge potential of expanding trade outside the EU.
The UK is seeking an effective place in the re-forming global landscape, one based on a strong economy, one whose growth has several pillars, and is sustainable. Let’s hope the Commonwealth Economic Forum will be very successful in the summer and that the UK will take an active and leading part.
