Britain In The World – A long slide into oblivion?

When discussing Britain’s Foreign Policy objectives, in particular the possibility of remaining an influential actor in the coming decades, it is common to attract derisive comments from people convinced of our approaching irrelevance. This is often accompanied with statements asserting the unstoppable rise of new powers in contrast to our own decline, and thus the necessity of banding together with our friends in europe in order that we may act as one puissant whole. Yes, as advanced economies our growth rate will be slower than the new rising titans, and yes the west is subject to demographic decline which will further erode our net ‘weight’, but is it really true that the middle of the century will herald an era where Britain cannot contemplate an assertive and independent Foreign Policy?

Are we limited to the twin choices of a federal europe or a harlot chasing others interests?

Perhaps not.

When this blog was exploring Hague’s vision for British Foreign Policy it used a paper from the Carnegie Institute, and did so under the assumption that their economic projections were a reasonable middle-of-the-road forecast. Now, we have two new papers from HSBC and Citi Group each forecasting world economic prospects in the 2050 time frame, so was this assumption reasonable?

Links to the three papers are here:

Carnegie – The World Order in 2050

HSBC – The World In 2050

Citi – Global Growth Generators

Although there are many relevant measures of economic weight including GDP purchasing power parity and GDP per-capita, let us first look at nominal GDP –

As we know, according to the Carnegie Institute Britain falls to seventh, but overtakes France & Germany.

According to HSBC Britain’s economy remains the sixth largest by 2050, just behind Germany.

According to Citi Group Britain slips to tenth place, but remains the only EU nation listed.

So yes, Britain becoming the largest EU economy within a generation seems wholly achievable, but what must be distressing for other european nations with pretensions to world influence is the rapidity of their relative decline.

What is the cause of Britain’s continued economic relevance? Sustained growth rates faster than our continental neighbours assisted in part by a healthier demographic profile:

Surely this would be a hollow thing if Briton’s individually were not wealthy enough to preserve a standard of living conducive to a stable political system, and indeed to perpetuate a high-tech economy that will maintain that standard of living in years following?

Quite, but this is apparently a problem more pressing on our european neighbours.

According to the Carnegie Institute Britain will remain one of the wealthiest among our peer group of G20 powers, even when adjusted for purchasing power parity:

In fact, according to Citi Group Britain will remain one of the wealthiest per-capita nations full-stop, even compared to the likes of Switzerland, Singapore and Hong Kong:

So, enough from the doom-sayers, if Britain wishes to retain an independent and assertive Foreign Policy it is well within its capability to do so.

One can quite understand the unease of France, Germany, Italy and Spain on the other hand, there relative decline is quite apparent.

Update – 2012/01/19 – Another 2050 projection from the Arthbutnot Group this time:

“Of the Western European countries the UK does indeed become the biggest economy ahead of Germany helped by its demographics.  The UK is richer (per-capita) than France, Germany and Italy by 2050, partly reflecting its favourable demographics.”

17 responses to “Britain In The World – A long slide into oblivion?

  1. So we will be wealthy enough to what exactly ? What does an “independent and assertive foreign policy” look like – in your opinion ?

    Personally, I think while keeping loose ties with Europe and the US, it would do us good to remember the ‘old’ alliances, and even the empire (!) – yes I said the ‘e’ word…..

    Australia, NZ, Canada, South Africa and India – English speaking countries covering every ‘corner’ of the globe from a strategic stand point. All countries that we have very old associations with, some standing alliances, some cultural ties, some similarities in reliance on international trade, and indeed some similarities with respect to need for naval rather than land forces (except perhaps for India which has two contested boarder regions).

    • I am absolutely agreed Jed, and while I didn’t go into what that Foreign Policy might be it is certainly the intention to demonstrate that we would have freedom to manoeuvre with partners outside europe.

      Of course none of this is to suggest that we would not, and should not, cooperate and work with the nations of the EU, but we need not be constrain our horizons from other partners.

  2. And while I agree with your last para about the EU – I think we should do a ‘Norway” and regard Europe as a “common market” and not a supra-national entity.

  3. Jed,

    A sound bit of analysis on your part; ultimately, it IS the ‘economy stoopid’ – but when you fold into that membership of all the key international ‘clubs’, history, location/timezone our nation’s demonstrable talent for inventiveness, artistic creativity and ability to re-invent itself, these are all factors that could/will allow the UK to punch above its weight.

    Indeed our alliance within the EU with the Nordic and Eastern Members will become increasingly important in forging the EU away from its current Franco/Belgian construct. Our partnership with the US may well become more relevant, as the US realises that it is no longer the power it was – and their need for ‘strategic-friends’ becomes greater…..and IF, we can work with our Commonwealth partners to reform that organisation to become more relevant, our influence could well increase markedly. But we need to get the balance right; its Churchill’s ‘3 Circles’ again.

    However, first we have to deal with the here and now of economic and fiscal malaise. If we keep a grip on our finances, are able to retain a coalition or centre-right government which is able to successfully reform its dysfunctional state organisations and free its private sector to become more competitive (but whilst retaining all appropriate checks and balances) then we could have an extremely bright future. But we do have to guard against our debilitating talent for a short-termism that consistently undermines our own financial and economic position.

    If we can manage ourselves properly, things may well look significantly brighter post 2015. Indeed only yesterday Fox and Hague admitted to Commons Committee that if all goes to plan, the Government is planning to INCREASE the Defence Vote post 2015. If your economic projections hold true Jed, we will easily be able to afford the new Carriers, CAG et al. Economic strength + strategic leverage = international influence. Despite the doomsayers we are still very well thought of on the national stage;

    …and it is this returning (post Iraq) soft power influence that, if we use well, will allow us to talk softly, whilst carrying a pretty big (strategic leverage) stick.

    Onward and upward chaps.

    • agreed with everything you say Deiter, particularly the following:

      “Our partnership with the US may well become more relevant, as the US realises that it is no longer the power it was – and their need for ‘strategic-friends’ becomes greater”

      the ability to bring a useful europe along to the party will work to our benefit, whether we ‘Norway’ it or not given the move to improved bilateral military relations with europes nations.

  4. Have you seen John van Reenen’s paper on the British economy in the 2000s? Argues that even when you take the GFC years 2007-2010 into account, productivity growth was better in the UK than anywhere else in Europe, and in fact labour productivity per man-hour exceeded that of Germany for the first time since…whenever. Even R&D investment was up over 1997-2010, for the first time since the 70s.

    Problems: financial sector mess, getting from R&D projects to products (as always), and (interestingly) too many hereditary managers.

    • Cheers, I had not.

      I am particularly interested in the management quality score, and the difference this makes on productivity growth, and wonder whether this in part accounts for the rosy projections for Canada in all these studies.

      I struggle with his premise that austerity Britain is putting this all at risk, for while I agree with many of his prescriptions I don’t see how this fundamentally damages the case against spending less, better.

      A specific example where he does make the connection adequately is the patent-box/R&D tax-credits, but even then it may be a case of being better to have both as Britain does have a long-standing problem with turning invention into innovation.

      An another, I do absolutely accept that restricting immigration will damage growth, particularly so if deters high-value specialists from important growth sectors, but there is no option but to stop the open-door policy and the social strife it is causing in poor urban communities.

  5. So now we are going to lead the northern and eastern EU countries? What happened to us leading the southern EU countries?

    • x,

      I remember there was a fair amount of sarcastic comment to that effect at the height of the financial collapse, because of the shared quality of shaky public finances and indebtedness. But I’m not sure how serious the notion ever was. I could stand to be corrected, though 🙂

  6. There are two problems with the reports you cite: 1. They recommend that the European Union Member States band together to remain relevant in a world where they will be unable to exert much influence by themselves. 2. You omit the fact that the gulf between the largest three actors in 2050 and the United Kingdom will be absolutely enormous (which is why Carnegie, in particular, recommends 1). So it doesn’t really matter whether Britain is 5th, 8th or 20th on the list, much as it didn’t when two powers dominated the world during the Cold War.

    And really, all this nonsense about rekindling the Commonwealth needs serious reconsideration. Do you really think that a bunch of countries, which, incidentally, parted ways with Britain many decades ago, and crucially, are located in very different areas of the world, as well as having little economic connexion with Britain (and where whatever they do have is declining relative to places like China), are going to be able – or be willing – to do anything to help Britain exert itself in the world in the decades ahead? Warm feelings between Britons and Australians, or New Zealanders, or whoever, may exist from time to time, but these are no match for the brutalities of geopolitics…

    • Hi James, thank you for the reply.

      To the first point; its a cost benefit analysis. The cost of ever further integration, versus the benefit of greater clout on the international stage. Or to put this another way; to a accept a reduction in the quality of representative government at home in order to achieve an increase in diplomatic leverage abroad. This is a sum that may work out differently for others but my principle interest is that government works to the welfare [and] wellbeing of its people, and that requires a system of governance that is perceived as both accountable and representative.

      That is fundamentally at odds with ever-deeper-union, and is technically unnecessary to achieve the St Malo Tasks. In short Britain should work to improve european cooperation and coordination of Foreign Policy via pooling sovereignty at the inter-governmental level, rather than ceding it to a manufactured supranational level. That supranational governance can be neither representative or accountable and thus will be considered illegitimate, that is a large cost, to achieve an aim that can more appropriately realised through bilateral and multilateral military agreements.

      The second point is twofold; one that the vast majority of global wealth creation will happen outside europe in the 21st century, and that the commonwealth is an area where we have an innate advantage when it comes to trade. The problem with our myopic fixation on europe is that attempting to rein in the protectionist instincts of the common markets constituent nations has prevented us forming bilateral and multilateral trade agreements with the outside world for reasons of both a technical nature and attention. Further, the Commonwealth does include some of the worlds fastest growing developed and developing nations and the grouping could provide a venue to exercise our interests outside the EU and UN. All I ask is that Britain becomes less inward looking, although I know we might argue about how that term should be defined in IR terms.

      In short, as I have always said I am totally in favour of cooperation and coordination to achieve common aims, where they exist, but that should be achieved by intergovernmental means rather than supranational in order that it does not lead to civil strife from a populace that cannot see its government as legitimate, and that we have enough advantages to achieve our Foreign Policy goals in this manner anyway.

  7. Hi James and jedi.

    v good two points raised (separate, but inter-related…
    On the first, I fully subscribe to this one (and it goes with a point made much later, about becoming less inward looking):
    ” is fundamentally at odds with ever-deeper-union, and is technically unnecessary to achieve the St Malo Tasks. In short Britain should work to improve european cooperation and coordination of Foreign Policy via pooling sovereignty at the inter-governmental level, rather than ceding it a manufactured supranational level”

    The second one, warm & cosy? I think it is exactly the contrary (most of the time): rather than do x to help Britain exert… etc, it is about real Politik, after decades/ half century of being blinded by the recent history, actually coming to see the common interests more clearly (the brutality of geopolitics in no small measure deriving from the balance – economic first, and military with some delay – never having shifted so quickly before)

  8. This is part of why i hate surfing the web and finding britons who seem to take pleasure from being crybabies and moaning of “broke britain” and “lost empire”…
    The worst menace to the economic wealth of the UK is that kind of catastrophism in britons.

    Spain and Greece and even my homeland Italy should, like… hang themselves up right now, if Britain is “broke”.
    We’ve got Berlusconi, for Christ sake. And the opposition sucks twice as much as him, to make things even worse. We’ve got a quite huge deficit, less economic growth and the biggest frigging public debt in Europe.
    Yet we are not broke, nor do you hear italians crying, nor do we have chopped our fleet or disbanded squadrons of planes or launched isolationism plans to retreat in our little peninsula.

    That only serves the purpose of speeding up decline.

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