Friday, 27 June 2014 09:22

UK Trade & Investment with the Mediterranean

by Spyridon St. Kogas, Chief Executive Officer of Knowledge Industry Group

This year the British economy reestablish its position to global market, rising its macroeconomic indicators to levels that remind us the period before the Great Depression wave of 2008. The International Monetary Fund has predicted Britain will be the fastest growing major economy in the developed world this year with growth of 2.9%. The Governor of the Bank of England, Mr. Mark Carney is expecting 3.4%. Manufacturing output rose by 1.3% – its best performance since the end of 2009 – and 3.4% year-on-year. Construction rose 0.3% in the first quarter and was 5.1% higher than a year ago.

Everybody has the feeling that the impact of the Great Recession hasn't faded out but the recovery signs are giving a strong sense of optimism for the near future. The forecasts of the IMF placed the UK economy to the fifth position in the world economic rankings behind the US, China, Japan and Germany. And this is not a small thing after five hard years of crisis. From this point of view those who support that this is the right time for a British come back to the world trade & investment agenda probably have right.

The re-engineering of the UKTI strategy for the 21th century is now a crucial challenge for the acceleration of this re-establishment of the British Economy.

We underline that from the UKTI''s strategy plan of 2009 the main concern for the British international re-orientation was the harmonization of the UK economy with the emerging markets and the opportunities that arise beyond the traditional British partnerships, such as US and European Union.

The traditional world-leading role of UK in world trade and the undoubted power of UK economy because of its FDI's attractiveness, make realistic any revitalization of the British ambitions for a dynamic recovery in the world economic giants. And this could be true and would be extremely helpful for the economy of any emerging market. Of course that's why the Mediterranean area should be placed at the centre of UK's attention and the opposite, the countries of the Mediterranean to re-approach their economic relations with United Kingdom from the perspective of its new dynamic role.

Mediterranean cases

The geographical distribution of UK trade does not correspond to the areas of the world with the most economic growth potential. The UK imports and exports are heavily orientated towards the EU and, in particular, the euro-zone. Around a quarter of the UK's trade is with other developed countries outside the EU, while a comparably smaller share of Britain's trade is with the emerging economies to the East and the South.

Spain, Italy, France and Germany together account for 22% of the UK's goods and services exports – an area forecast to grow at under 2% a year up to 2050. However, India and China together account for only 3.75% of total UK goods and services exports yet are predicted to grow at between 6% and 8%.

The need for a strategic acceleration of trade & investment to the Growth Drivers of world economy is vital for the UKTI in the 21st century.
We can place on the same category but not on the first line of the global development the Mediterranean markets. Saying this obviously we propose to focus on the emerging Mediterranean and not necessarily to Spain, France or even the Italy.

To support this we use below five countries as cases about their present relations with the UK economy.

UK & Egypt
The UK is Egypt's largest foreign investor based on cumulative FDI figures since 1970.
Cumulative UK investments in Egypt are estimated at over US$20billion. There are over 900 UK invested businesses (source: GAFI, Egyptian General Authority for Investment), including companies such as British Gas, BP, Shell, Vodafone, Barclays, HSBC, GlaxoSmithKline, AstraZeneca and Unilever.
The UK's investment portfolio is diverse including oil and gas, financial services, pharmaceuticals and telecommunications. In 2012 total imports to the UK from Egypt was £624 million and UK exports to Egypt were £921million.

UK & Turkey
Trade between the UK and Turkey is worth over $11 billion a year. There are a number of business links between the UK and Turkey. Over 2,500 UK companies are currently operating in Turkey including BP, Shell, Vodafone, Unilever (UK), BAE, HSBC, Aviva and Diageo, Tesco, Harvey Nichols, Marks and Spencer and Laura Ashley. Top UK exports to Turkey include: machinery, mechanical appliances, pharmaceuticals, vehicles, iron and steel, plastics.
Nonetheless the UK ranks as the 11th largest importer into Turkey.

UK & Greece
Greece has remained a relatively stable, but small, goods trading partner for the UK in terms of the proportion of the UK's total trade in goods. Until 2010, Greece was the 32nd most important destination for UK goods (£1.4 billion or 0.5% of all UK goods exports) and the 29th most important destination for UK services (£1.1 billion or 0.7% of all UK services exports). Additional , Greece is one of the most visited overseas destination for UK travelers.
The new transition of Greek economy to a new economic environment, its too early speaking about Greekovery, concentrated on exports and to an investment-oriented transformation of its market , could be attractive for UK Trade & Investment.

UK & Tunisia
The top UK exports to the Tunisian market are textiles, cereals, gas (natural and manufactured), medicinal and pharmaceuticals, machinery, transport equipment, iron and steel, plastics and chemical products. The main UK imports from Tunisia in are textiles, petroleum products, fertilizers, fruits & vegetables, road vehicles, iron and steel. The UK total imports from Tunisia in 2012 were £ 344 million (£634 min 2010) and the UK total exports to Tunisia in the same year were £ 160 million (£202 min 2010).

UK & Croatia
Croatia is a promising market for UK companies. The workforce is skilled; many employees in main cities and towns have university/degree level education.
This makes Croatia to offer big investment opportunities on Services and High value added industries. Croatia's traditional trading partners are Italy (15% of total imports), Germany and Austria. The UK visible exports are approximately at £150m.

We used the above examples in order to underline the fact that UK economy has a strong and historical presence in trading relations with the whole area but its position , with the exception of Egypt, in the economic life of those markets is not corresponding with the UK global role and position in the world economy. If someone consider further the dynamic entrance of the BRICS countries in the Mediterranean markets the last seven years, the comparison of their trade flows with the UK ones will give many interesting conclusions.

The importance of the Mediterranean zone in current global economic field summing up to three axons:

1. The Mediterranean region is the concentration area of the new geo-economical flows of global economy.

2. It is the concentration area of the most important geopolitical contradictions.

3. It is the area of the most crucial social, cultural and ecological intercontinental transformations in the world.

The whole frame of action for any global economic giant who want to re-establish its role in Mediterranean is based on the above axons.
The advantages of United Kingdom are many but we will stand on this that we appreciate as the central one. This is the bridging character of UK economy, that it is the necessary link for the interdependence of the West economy with the Rest whole world. This precious independent and unique position of UK its not a geographical one, but has to do with its trading and investing diversification to every corner of the world market.
The majority of the Mediterranean Markets are conceived by this sentiment of the Emerging Power, they are aware about the opportunities of their relocation on the globalization project and they have already start to demand more from themselves. This is one more dimension of the causes of the Arab Spring for example; to get into the globalised market as equals with the other countries and societies.

For that reason they are really open to partners with experience, global status, international trade & investment networks and higher education services. The Great Britain has these features. The difficult is to test these features into the deep waters of cultural, political and economic contradictions that turmoil the Mediterranean area again and again.

The traditional initiatives, institutes, platforms, networks that were trying to promote the regional integration of the Mediterranean with European economy are not working any more.

Their main targets remain distant dreams. The whole frame in the region is under formation, the regionalism would be more asymmetrical the next five years in the Mediterranean and new players already shape how this going to be true. The sure thing is that the new Mediterranean will need United Kingdom's wisdom and innovative spirit and UK will need the social dynamism, the new resources and the routes of the new Mediterranean.

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