At a time when Euroscepticism is a hot topic, should the UK be looking beyond Europe for growth opportunities?

Henry Mitchell writes on how we must look outside of Europe for our future growth opportunities by investing in the BRIC counties and utilising our position of being the financial centre of Europe

British Empire Map

Like it or not, we are well and truly integrated with Europe.  Over the years, political ties, agreements and treaties have brought us all closer than ever before, so much so that some are now referring to the United States of Europe.  They cannot be far wrong really, with EU countries named ‘member states’ and many of our laws now decided in Brussels – the main difference perhaps being that Brussels’ political elite are unelected.  The bigger the EU gets, the more people (particularly politicians) want to stress the importance of political and economic unity, claiming that it is vital to our individual economic survival.  I was surprised to learn however, that only 40% of our trade comes from the EU (despite the pro-EU politicians claiming otherwise), with the other 60% coming from the rest of the world.  I say only 40%, it is a high figure proportionally and is not to be sniffed at.  What we don’t always pay attention to though is the rise of economies that soon will collectively pass the economic significance of Europe.

BRIC Countries Leaders

In 2001, Goldman Sachs created and coined the term BRIC—Brazil, Russia, India and China—to identify the world's fastest growing economies.

To start, we have the BRIC countries: Brazil, Russia, India and China.  Now we all know about China, but Brazil is of particular interest to me, due to its location in South America.  Almost a forgotten continent in many ways, South America does not currently have any real powerhouse economies, it’s predominantly poor and developing in contrast to Europe’s mass of developed economies, and is more of a cultural attraction than a Business hotspot.  Brazil is moving forward, and fast.  Widely predicted to sit within the 5 largest world economies within the next few decades, we need to take note.  With economic power comes political power, and when (not if) the world’s fifth largest country becomes the financial centre of a forgotten continent, their political influence will follow suit.  The reason this is more relevant to Europe than we realise is that at the moment, we’re not going anywhere.  Our economies are stagnant, with the UK particularly lacking in a diversity of industries, exports and innovation.  Even if we can pick up our measly 2% growth per year (where we were roughly at before the recession), that won’t stop the BRICs catching up.  It’s not that we need to stop them, but we do need to recognise that our power and influence politinomically (my new word for the combination of politically and economically – one and the same in many ways) will not stay at the top forever.  There will come a time, probably within the next 50 years when much of the world is on a far more equal footing.  Forget G7/G8/G20 summits, how about G50/G80?  How are those meetings going to pan out?  Europe and the US will end up holding collectively, a very small share of the vote.  So I think it’s time that we all wake up to this fact that this is where the world is going, and we’re not going to be a world power for much longer.  The 60% of our trade that doesn’t come from Europe is arguably more important in the long-term, than the 40% we get from Europe in the short-term.  Sure, we need the EU, but if in the future it ends up representing less than 20% of our trade, then we will be forced to turn our attention elsewhere.  Surely it seems sensible to think about this in advance, well before it becomes a true reality.  I’m mindful of the huge economic growth that Japan went through following the second world war.  Everyone knew what was happening, but the only household brands you see there now are US exports, there’s next to nothing from Europe bar fashion and German cars.  Twinings and Wedgwood are a couple examples of our contribution, but they don’t really compare to the US influence.  Despite the rather limited worldview that many American’s seem to share, in business they have always looked at opportunities for overseas expansion – and they have always succeeded in this area.

The rest of the BRIC countries – Russia, India and China are more well known to most of us for their economic growth.  China especially so, with its one huge market, and growing middle class population.  Many profitable brands have benefited during the recession from their operations in China, particularly luxury car manufacturers and top fashion houses.  And, whilst China is providing the world with cheap goods and manufacturing, India is providing skilled labour in the services industries, with many UK based companies now out-sourcing many of their requirements to India. The main point of this article though is this:  we must look outside of Europe for our future growth opportunities and utilise our position of being the financial centre of Europe (there seems to be come resentment over this is other major EU economies).  If we can start our investment in these developing economies now, not just through finance but also through encouraging our best UK businesses to look far beyond Europe for their expansion opportunities, then long-term we won’t need to rely on Europe in the way we do now for much of our trade.  This in turn, will help move our political relationship away from one of needing Europe just a little too much to a more balanced position.

Do we need to look beyond Europe for growth opportunities? Is investment in BRIC countries the answer – and is the US getting this right already? Will world trade ever be on a ‘more equal footing’? 

Henry Mitchell is a social Entrepreneur and founder of The 1 Month Project, a collaboration community created for inciting discussion on social, entrepreneurial and economic issues as well as instigating a series of “1 Month” projects, each designed to impact and change the world, if even in a small way.  Henry’s mission is to connect people together in ways that haven’t been done before, focusing on social interaction as the key factor in making things happen.  He is currently working on some exciting businesses that aim to address the disconnection in English society.  You can contact him through www.the1monthproject.wordpress.com.  He is always open to meeting new people, especially if it involves good conversation, so please do get in touch.