The world is experiencing an economic slump. Governments are quick to quell rumours of a recession, referring instead to “volatile economies” and “difficult times”, but that doesn’t stop the people on the streets from using the word freely. People are worried; they’re worried about the rising costs of fuel and basic foodstuffs, as well as the potential for food shortages across the globe. Amidst all of this bad news, however, there is a glimmer of hope, at least as far as investment in the UK goes. According to a new report by KPMG, the UK is the most popular European inward investment destination for global corporations; a trend that’s set to increase over the next five years.
KPMG asked corporate investment strategists from over 300 multinational companies where they plan to invest within the next year and then again in five years’ time. Looking toward the next year, the UK lies third in the world for inward investment, with only the US and China ahead of it. In five years time it will fall to fifth place after being overtaken by Russia and India, but will still experience a 3% growth.
The rise in investor confidence has been attributed to the relative stability of the UK market, as well as the perceived fairness of political and justice systems. For years the UK’s tax system has counted against it, and even now some investors are still wary of investing because of it, but it seems that stability is a greater attracting factor than tax is a detracting one. Nevertheless, Sue Bonney, head of tax for KPMG’s EMEA region, believes that the UK would benefit greatly by revisiting and improving its tax system.
Good news for the economies across the world is that most investors believe that the current crisis won’t last much longer than the next two or three years, and that in five years’ time, nations will once again be flourishing.
Other trends indicate the emergence of BRIC economies as a force to be reckoned with. According to a report by Goldman Sachs, Brazil, Russia, India and China (BRIC) could overtake the G6 economies in terms of growth by 2050. According to the International Monetary Fund (IMF), stocks in the BRIC nations have risen by 70% over the last two years, which is enormous when you compare it to the growth of other emerging markets, which was only 42%.
Both reports indicate that India and China will experience significant growth over the next few years. China is expected to be the third largest economy within the year, surpassing Germany, while India is reported to be the fasted growing economy, and will achieve third place globally behind China in 2050.
Experts agree that the continued growth of the European and BRIC economies will bring about a balance in the battle for economic power between the Americas, Europe and Asia. According to Sue Bonney, it could even “herald the start of an entirely new global economic game”. And that’s good news for consumers everywhere.
By: Sandy Cosser