Hamish McRae: Whether we like it or not, the Royal Family is our strongest global brand

Economic View

It is an odd weekend, isn't it? The fairy tale of the royal wedding is counterbalanced by the backdrop of major economic and political concerns.

We have had something like two billion people around the world watching the wedding: with the possible exception of the funeral of Diana, the largest television audience ever. Yet we worry – I think rightly – not just about the current troubles of our economy but more generally about our place in the world.

So maybe it is a good time to reflect on that. We have this amazing global brand, which we have grown up with and regard as normal. But it is not normal at all, for when the brand puts on a show, one-third of the world's population chooses to watch it. In an ever more globally competitive world, the tough question every country has to ask itself is: what can we do that others can't do just as well or better? Is this our place? Are we principally selling ourselves as a fairy tale, a Disneyland? If so, what of the other endeavours that we feel define us just as importantly: our skilled manufacturing, our great universities, our service exports and so on?

There are more questions than answers, but one thing is sure. How we present ourselves to the world is not within our control. However much we might wish to shout about our modernity, it is tradition that pulls in the punters. The task for the country surely is to pursue excellence in every aspect of economic life, recognising that tradition is an integral part of our role in the world.

So where might the country be in another generation or two – the country of which, presumably, William will be king? I have been looking at various bits of research about the way this country might perform, and the charts come from one of these, a booklet called The World in 2050 by PricewaterhouseCoopers (PwC). They show, on the left, the order of world economies in 2009, with currencies converted at purchasing power parity rather than current exchange rates. On this measure, the US remains the world's largest economy, with China number two and India jumping up to fourth place. Britain slips down to seventh. (If you use current exchange rates, India's economy remains smaller than that of the UK.)

Now look at the other graph, the projections for 2050. The most obvious point is the way in which the large emerging economies have outpaced the developed countries, but it is also interesting to see how the UK is expected to fare. We slip down, of course, but only to number 10. There is a warning for the UK, for PwC argues that it risks "playing in the slow lane of history" if it continues to focus on markets in North America and Western Europe rather than the fast-growing ones in Asia and elsewhere.

That does seem a very real risk, and I have always worried about our dependence on slow-growing European markets, but there is no magic wand that redirects exports from one region to another. Or rather, in so far as there might be a policy tool, it is encouraging inward investment from the emerging world. The best example of that has been the investment from India, with Tata not just saving Jaguar and Land Rover but also helping redirect their output towards India.

The other point to make is that we should not overly focus on physical exports but also look at invisible or service earnings. Most of our merchandise exports do go to Europe, as you might expect given the physical proximity of the Continent. But most of our service exports go to the rest of the world. The UK is the second largest exporter of services, after the US, whereas it is only the sixth or seventh largest exporter of goods. Our huge surplus on services offsets most of the deficit on physical trade. One branch of our service exports, that of banking, is currently under a cloud and most of us expect it will remain in convalescence for a while yet. But other aspects of financial services, such as securities markets, fund management and insurance, can be expected to carry on growing strongly. That leads to an intriguing question. To what extent might the branding of Britain play to our strength in services rather than our manufacturing?

There is one particular area of services where the brand helps directly, – tourism. London, in particular, has become a great urban resort, the place where the world's rich spend their money. It is an aspect of economic life that sometimes makes the place more difficult for us Britons, as we have to pay global prices out of our UK-taxed incomes, but foreign money has undoubtedly been a huge help in enabling the London economy to scramble through the recession.

Beyond that, I suspect that the impact of brand is marginal but positive. In education, fashion, cultural activities and the like, what matters is how good you are. Oxford University does not directly benefit from the sense of historical continuity that the monarchy represents, any more than Cambridge will benefit from having a duke and duchess named after it. But in a world where much wealth is new, there is a lure of the old. To put the point slightly differently, one of the characteristics of the new rich everywhere is that they want to buy top-of-the-market goods and services. All economic competition is at the margin and brand helps.

A final point. One of the lessons of this weekend is that the UK brand is remarkably strong, stronger perhaps than many of us in Britain appreciate. The wedding is part of that, not the most important part by any means, but a useful way of getting other aspects of the country noticed. Were we to try to trade simply on heritage we would be doomed to play in the slow lane, as PwC warns in that report.

If, on the other hand, we recognise the things that are special about this country, and set those in the balance alongside the things we need to fix, then maybe we can live more comfortably with ourselves in the years to come. I personally find the present questioning mood far more healthy than the swagger of five or ten years ago, but along with the questioning we are surely allowed to celebrate, too.

How can we break the cycle of war that keeps poor countries poor?

The World Development Report, published each year by the World Bank, received less attention when it came out earlier this month than it usually does, perhaps because its main theme – the damage done to human and economic progress by conflict – has been overtaken by the daily reports from North Africa and the Middle East.

That is a pity, because most people are not aware how widespread human conflict is. The chilling statistic it cites is that 1.5 billion people live in countries affected by violent conflict. They may not be directly involved in the fighting but their lives are profoundly affected for the simple reason that conflict makes it impossible for economic progress to be made.

Introducing the report, Robert Zoellick, the World Bank's president, makes five simple points that deserve a wider airing. The first is that national institutions have to be legitimate – obvious, except that in many countries they are not. Second, people need jobs, order and security, with the private sector being the key to employment. Third, foreign institutions working in the developing world need to change: in particular they need to co-ordinate their efforts and accept a larger element of risk. Fourth, partners need to operate at local as well as national levels, what he called a layered approach. And finally, everyone involved in international aid needs to be aware of the rebalancing taking place in the world, with middle income states becoming more important in the development process.

The great difficulty is how to break the cycle of war destroying wealth and job opportunities and that destruction leading to more war. The report does have a number of suggestions but its main achievement may just be to detail the destruction. There is no magic path by which a poor country can suddenly become rich but there is an absolutely certain one that will mean they remain poor.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine