By NICK
FAGGE
Last updated at 1:01 AM on 26th December 2011
Figures show a dramatic illustration of changing global
fortunes
Brazil fast-becoming one of the powerhouses of the global
economy
Britain has been deposed by Brazil as the sixth largest
economy in the world, latest figures show.
In a dramatic illustration of changing global economic
fortunes, the UK has fallen behind a South American nation for the
first time.
The figures, from the Centre for Economic and Business
Research’s annual world economic league table, show Britain is now
the seventh richest country in the world.
New money: The economy of
Brazil. Latin America's largest country, has surged because of vast
reserves of natural resources and a rapidly growing - and cash-rich
- middle class
Falling behind: The UK
languishes in the grip of a national debt crisis and lack of bank
credit
The U.S., China, Japan, Germany and France occupy the top
five places.
More often associated with football and dirt-poor shanty
towns known as favelas, Brazil is fast becoming one of the
powerhouses of the global economy.
The largest country in Latin America, its economy has surged
because of vast reserves of natural resources and a rapidly
growing, and cash-rich, middle class.
At the same time the UK languishes in the grip of a national
debt crisis and lack of bank credit. Britons continue to be better
off and enjoy a far higher standard of living than the vast
majority of people in Brazil but the latter’s 203million population
provides huge economic clout.
‘The punching power of Brazil as a whole has overtaken
Britain because of the huge economic potential of people who live
there,’ Peter Slowe, a former government economic policy advisor,
told the Daily Mail.
‘Brazil has a variety of natural resources to rely on
including gold and silver as well as oil off-shore and minerals in
the Amazon.
‘By contrast the UK economy is affected by the problems of
the eurozone.’
Brazil’s stable political situation also attracts
investors.
Its hard-won democracy also provides foreign investors with
the peace of mind that the status quo is unlikely to be overturned
by a popular revolution. Brazil floundered under a number of
military dictatorships throughout the 20th century until civilian
control was established in 1985.
The rapid economic development in the huge South American
state is likely to come at the expense of the Amazon – and its
indigenous people, animals and extraordinary forests.
Dr Slowe said: ‘Brazil, unlike China, is a democracy which is
much more attractive to investors.
‘This means the country is unlikely to undergo prolonged
civil unrest which is likely to occur at some time in
China.
‘The country has huge potential but the vast majority of
their resources are in Amazon basin.
‘And the cost of exploiting this mineral wealth is the loss
of the habitat and the traditions of indigenous tribes who have
lived the same way since the Stone Age.’
The relegation to sixth spot is the latest blow to the
British economy.
In the middle of a prolonged economic downturn and dragged
into the euro crisis because of its trade relations with the
Continent, the UK has also been involved in an unseemly spat with
France.
London has come under sustained attack from French ministers
over which country has the best economic prospects.
Although the latest figures from the CEBR would suggest the
French are ahead, they also predict that Britain will leapfrog
France by 2020. The CEBR says that by then the UK economy will be
the eighth largest in the world, one ahead of France and two behind
Brazil.
By ALEX BRUMMER
Carnival: Brazil can
celebrate
Britons have long been proud of the economic success of a
nation that has punched well above its weight in the world. So news
that our output has fallen below that of Brazil will come as
something of a jolt.
After all, the British empire – and its engineers and
financiers – were behind the building of much of the infrastructure
of Latin America, a legacy that endures today.
But rather than viewing our decline vis-à-vis Brazil and
other fast-growing economies as a blow to our prestige, we should
see it as an opportunity.
The tectonic plates of the global economy have shifted
dramatically in the past decade with the relentless rise of Russia,
India and China, as well as Brazil.
Other emerging market nations from South Africa to Indonesia,
from Korea to Malaysia and Singapore are pushing for places at the
top table.
The Group of Seven rich industrial nations, which excluded
the new wealth creators, was expanded in 2009 – at the height of
the financial crisis – to include many of the new powers to create
the G20. That has become the world’s top economic decision-making
body.
The events triggering Britain’s fall down the global league
table are partly predictable. Britain’s economy has failed to
expand since the 2008-09 financial crisis and output remains 4 per
cent below its pre-crash peak.
In contrast Brazil, which accounts for approximately
two-thirds of the output of Latin America, has been enjoying a boom
based on soaring prices for resources including oil, agricultural
products and metals such as iron and bauxite-aluminium.
Unlike the economies of the Northern hemisphere, Brazil also
managed to avoid being caught up in the United States sub-prime
crisis of 2007-09 and the sovereign debt catastrophe that has
turned much of Southern Europe into a basket case.
Good news? Economist Jim
O'Neill of Goldman Sachs believes the rise of the newly wealthy
nations provides a huge break for Britain
Leading economists – notably Jim O’Neill of Goldman Sachs –
believe the rise of the newly wealthy nations provides a huge break
for Britain.
With the current slow growth in the sclerotic eurozone, which
is likely to persist for years, it is a chance for the Government
and UK companies to direct their operations away from the
over-regulated single currency area to new markets.
Despite a decline in manufacturing in recent decades Britain
still has leading-edge companies in aerospace and pharmaceuticals
that are already making serious inroads in Asia.
DIAGEO, distiller of Johnny Walker and the world’s largest
spirits group, has conducted a series of lightning raids on newly
wealthy countries from China to Africa and Latin America (it
sponsors the Brazilian Grand Prix). Its goal is that within a few
years up to 50 per cent of its earnings will come from these
regions.
Most importantly, however, Britain has an edge in service
provision. This extends beyond banking and insurance activities
where the City of London is a world leader, to other key areas of
expertise including legal activities, accounting and consulting.Mr
O’Neill and others believe that these technical services together
with architecture and engineering consulting, as well as advice on
energy, infrastructure and water projects, offer a new dawn for
Britain.
So instead of seeing the rise of Brazil and other emerging
markets as a challenge to our national prestige we should exploit
it for our own benefit.
It is time to jettison our focus on the European Union, the
keystone of our economic and trade policy since our entry into the
Common Market in 1973, and restore Britain’s historic ties to Asia,
Latin America and Africa where the growth markets are orientated.
Brazil should not be regarded as a competitor for economic hegemony
but a vast market to be exploited.
