Emerging Economies

Sajid Javid Excerpts

Monday 14th June 2010 Commons Chamber

[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.

[Sajid Javid (Bromsgrove) (Con)]

Does the hon. Gentleman agree that one of the reasons why Argentina had all those problems was that when it defaulted on its debt a few years ago, it had both the largest budget deficit and the largest debt per capita on its continent? Does he see any parallels between that situation and the one that his Government left behind after 13 years of power?

[Chris Bryant]

Nice try, but we will come a little later to the problems that I see with the Conservative-Lib Dem Government’s approach to growth and why I think this debate points to some of the problems that we will see over the coming years. But no, I think that the problems in Argentina stretch back across 100 years. The Argentines failed to take advantage of their many strengths and they played their politics extremely badly. My fear is that they are doing exactly the same thing today.

The task for all those countries is to ensure their growth, while the task for us is to ensure that we match their performance pound for pound, real for real. It is worth bearing in mind how significant those economies are to the UK. To all intents and purposes, we are Russia’s banker, while we are Brazil’s seventh trading partner in terms of exports and India’s fourth. The emerging economies have become increasingly dependent on each other in recent years; thus China has now overtaken the USA as Brazil’s major partner. Our position in relation to the emerging economies should be to seek to do three things: first, build UK growth; secondly, fight bilaterally and on an international level for free and fair trade, rather than protectionist measures, which is something to which the Minister referred; and thirdly, constantly underline the importance of the rule of law and human rights.

Let me start with growth. I simply do not believe that it is possible for the UK to achieve a greater share of the markets, or a stronger role in the world, without a strategy for UK economic growth. The Foreign Secretary can huff and puff as much as he wants, but if the Chancellor is focusing only on cutting the deficit—whether through cutting expenditure or increasing taxes—and has no strategy for growth, we will have nothing to sell abroad, we shall lose out economically, and the Foreign Secretary will simply be left to manage the decline of our reputation abroad.