China, Japan, Germany, France and the U.S. occupy the top five places
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.
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| 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 |
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| Falling behind: The UK languishes in the grip of a national debt crisis and lack of bank credit |
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
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.
Forget the EU...this is where our future really lies
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| 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.
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.