Emerging Economies

Baroness Primarolo Excerpts

Monday 14th June 2010 Commons Chamber

[The Minister of State, Foreign and Commonwealth Office (Mr Jeremy Browne)]

I beg to move,

That this House has considered the matter of emerging economies.

I am delighted to have this first opportunity to speak from the Government Benches, and even more delighted to serve for the first time under your chairmanship, Madam Deputy Speaker. I trust that the high-preference vote that I gave you in the ballot will mean that you will look favourably on me if I go astray.

[Madam Deputy Speaker (Dawn Primarolo)]

The hon. Gentleman joins a long line of Members who have said exactly the same; I will, of course, be even-handed with everyone.

[Mr Browne]

I did not doubt that for one moment.

I welcome this opportunity to debate the new Government’s policy on the emerging economies. Strengthening the UK’s relations with the fastest-growing areas of the world economy is one of the key foreign policy objectives of the coalition programme for the next five years. That was explicitly stated by my right hon. Friend the Foreign Secretary when he opened the foreign affairs debate on the Queen’s Speech and observed that

“we live in a world where economic might is shifting to the emerging economies”—[Official Report, 26 May 2010; Vol. 510, c. 174.]

In the House, we all recognise the ongoing importance of Europe and north America to our foreign policy goals, but we must also be clear about where new opportunities increasingly lie. That means elevating our links with the emerging economies and expanding powers in other parts of the world as part of a distinctive British foreign policy. That is why, only a few days after the Government were formed, the Foreign Secretary and I were meeting counterparts from Mexico, Chile and several other emerging powers at the EU-Latin America-Caribbean summit in Madrid. The following week I also held talks with Foreign Ministers from Vietnam and Singapore, among others, at the EU-south-east Asia summit, which was also held in Madrid. I give an undertaking that I will be making our relations with emerging economies my biggest priority, with visits to several key partners, in the coming months.

Why is the issue so important? We live in a time of fundamental change, both economic and political. The last decade of the previous century saw a shift from the bipolar, cold war world that we had all become familiar with. The first decade of this century has seen another shift, just as dramatic, from a G8 world to a G20 world. Global economic decisions were once made by a grouping of European and north American nations in conjunction with Japan, but today such decisions are increasingly taking place within the G20—not only a much bigger group, but one that represents a much broader range of countries from every continent of the world. The UK strongly supports the G20, which reflects the economic realities of the 21st century and recognises the rise in the strength of powers such as China, India and Brazil. The next meeting of the G20, in Toronto a few days from now, will be an important opportunity to take this work forward.

It is impossible to get through one of these discussions without a barrage of fascinating statistics that people can take home, and I have a few to run past colleagues on both sides of the House. It is important to remind ourselves of how dramatic the change that we have lived through in recent years has been. In the past decade, China’s economic growth has averaged 9.9% a year, while the UK’s has averaged just 1.7% over the same period. India’s growth over the same period has averaged 7%. In 1980, China’s proportion of world GDP was just 2.6%; by last year, that had risen to 8.5%. According to some predictions, China’s economy may well equal that of the US as early as 2027, and by 2050 the Indian economy may well be bigger than the five largest European economies added together.

--- Later in debate ---

[Chris Bryant]

No, we tend to specialise in ears.

The Minister is the first Liberal in the Foreign Office for some 60 years, so I did a little research into previous Liberal Ministers there. Captain Neil Primrose, who was one of the last four, lasted less than five months—

[Madam Deputy Speaker]

Order. The hon. Gentleman’s points are very interesting, but he needs to ensure that he stays in order and relates his remarks to the subject of emerging economies.

[Chris Bryant]

Captain Neil Primrose, who took a strong interest in emerging economies at the time, and particularly Turkey, which we shall come to, unfortunately lasted only five months in government, because the Government collapsed, and his daughter ended up marrying a Tory. Cecil Harmsworth, who also took a strong interest in emerging economies, is someone whose family gave us the Daily Mail—we often forget that it was the Liberals who did that. The Marquis of Reading had to resign for insider dealing after just three months in the job, while John Simon ended up virtually a Tory, so I look forward to observing the Minister’s career.

There can be little doubt that the shape of the world’s economy is changing, as the Minister said, and it is changing at a pace that few would have anticipated just a decade ago. Over the past 10 years, the BRIC countries, as they are often referred to—Brazil, Russia, India and China—have alone contributed more than a third of world GDP growth, growing from one sixth of the world economy to almost a quarter. There is also a growing confidence in many of those countries about their economic and cultural future, and they want a far greater impact on the world stage. Indeed, they are often impatient with progress at the United Nations and elsewhere. Thus, in April, Brazil saw its lowest unemployment figures since 2001, and it confidently expects growth to reach 6% this year, and this from a country that in 2002 had to secure an IMF loan—the largest IMF loan ever at the time—of $30.4 billion. India’s growth rate is expected to be 8.6%, while China has been averaging at 10% not just for the 10 years to which the Minister referred, but for the past 30 years.

Nothing, however, is certain—we only have to look at a little bit of history to see that. In 1913, Argentina was the 10th largest economy in the world and enjoyed significant advantages over many others: great natural resources, a well educated population and strong international ties to the United States of America, Spain, Italy and the United Kingdom. Today, however, Argentina languishes. Why? In part, I believe, because of the self-inflicted political turbulence that it has experienced; in part, because of—[Interruption.] I do not think that it was socialism—if anything, it was national socialism, which was rather closer to Tory philosophy in those days. In part, the reason was that Argentina failed to deal with inequality, but it was also—and primarily—an economic nationalism that created unnecessary barriers to trade. I would say to Argentina today that economic nationalism will do it no favours at all in the years to come either.