British Business in the Global Marketplace

According to consultants PwC, the UK could be the fastest growing economy in the G7 group of rich countries (Canada, France, Germany, Italy, Japan, UK, and US) between now and 2050.  The optimism rests on two factors:

·         Demographics (a relatively large working age population)

·         Flexible economy (by European standards)

The UK’s performance will also depend on:

·         Setting up strong trading agreements

·         Remaining open to talented workers from around the world

The year 2050 is a long way out, but according to John Hawksworth, chief economist at PwC, “By looking beyond unpredictable short-term economic and political cycles and focusing on fundamentals, long-term growth projections can actually be more reliable than short-term forecasts.”

PwC forecast that emerging markets will dominate the world’s top 10 economies in 2050 (GDP – gross domestic product at PPPs – purchasing power parities):

You can see from the chart that the US is the only member of the current G7 remaining in the top seven, although it will be overtaken by India.  France has dropped to 12^th place in 2050.  Germany has fallen from 5^th to 9^th.  The UK slips to 10^th, but the newcomer Mexico comes in at number seven.  By 2050, Mexico could be larger than Japan, Germany, and the UK.  PwC predict that the fastest growing EU economy will be Poland.

Although they don’t appear in the chart above, three other countries are the fastest movers up the GDP at PPP rankings: Vietnam (from 32^nd to 20^th), Philippines (from 28^th to 19^th), and Nigeria (22^nd to 14^th).

By 2050, what are called the E7 countries (the emerging countries of Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) will have increased their share of world GDP from around 35% to almost 50%.  The G7’s share will decline to just over 20%.  Much will depend, of course, on what PwC calls ‘governance standards’ in the E7.

According to the Observatory for Economic Complexity (OEC) the UK is currently the 9^th largest export economy in the world.  Currently the top export destinations of the UK are the US ($51bn), Germany ($46.5bn), the Netherlands ($34.2bn), Switzerland ($33.6bn), and France ($27bn).  Approximately, 44-50% of UK exports go the EU, although that number is distorted by what is called the Antwerp-Rotterdam effect (British goods being shipped to those large ports and then dispatched to elsewhere in the world). 

While Britain has a global trading history, how many British business men and women today can say they are culturally intelligent or business savvy about the E7 countries.  While we cannot be sure what specific trade agreements will be negotiated, we can be sure that many of the E7 will need to become important nodes in the UK’s trading network. 

The British government must become fluent in making trade agreements with governments outside of its normal orbit.  It also means British businesses will have a lot of learning to do about the economies and cultures of relatively unfamiliar markets.  New operating strategies will have to be developed, and brands and products reworked to fit the nuances of local customers.

The second success factor is remaining open to talent from around the world.  Automation will increase substantially over the next few decades, but talent shortages in a range of skills will continue to act as barriers to growth.  One problem is that as the E7 countries become wealthier, they will be strong magnets for global talent.  The West will no longer be so attractive to the best and the brightest.  Much will depend on government immigration policies, of course, but business must be open to going where the talent is located.  If talent can’t or won’t come to you, you may need to look elsewhere for the talent pools for your business.  Morgan Stanley set up a Mathematical Modeling Center in Budapest to provide quantitative analysis support for their global fixed income trading business.  Hungary has a pool of outstanding mathematical talent.

Attracting global talent in – or going out to find and leverage it for competitive advantage – depends once more on cultural intelligence and international business savvy.  When talent holds the power, companies must find ways to accommodate global diversity.  Talent in the future might be more resistant to ‘one size fits all’ corporate cultures.

Evolving realities like Brexit and the power shift to the E7 economies will test the adaptability of British businesses.  The fact that English is widely spoken in the global marketplace is both a blessing and a curse for the British.  Without a grasp of International English (as opposed to English-English or American-English or Australian-English) English speakers often fall into the trap of assuming shared understanding when English is spoken – an assumption that is sometimes false and costly.    

Our past economic and political influence around the globe in no way gives us an edge in the global marketplace.  Much learning and unlearning must be done.  This is no time for complacency. 

To find out how to develop the right skillset in your team to cope with changes in the workplace visit our Cultural Intelligence hub.

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