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.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Britons buy more than 30 million handsets each year, keeping them for an average of 18 months
tech
Arts and Entertainment
Alloysious Massaquoi, 'G' Hastings and Kayus Bankole of Young Fathers are the surprise winners of this year's Mercury Music Prize
musicThe surprise winners of the Mercury Prize – and a very brief acceptance speech
Arts and Entertainment
TV Presenters Ant McPartlin and Dec Donnelly. Winners of the 'Entertainment Programme' award for 'Ant and Dec's Saturday Night Takeaway'
musicAnt and Dec confirmed as hosts of next year's Brit Awards
Arts and Entertainment
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
film
News
video
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

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain