In her 2009 Christmas message, the Queen said that the Commonwealth “in lots of ways is the face of the future”. While many dismissed last week’s Commonwealth summit, there is much truth in Her Majesty’s remark.
Boasting numerous fast-growing emerging markets and spanning five continents, the 53-member Commonwealth will play a major role in the future of the world economy.
Far bigger than the European Union, for instance. Back in 1980, the nine nations then in the EU accounted for 30pc of global gross domestic product – measured by purchasing power parity, adjusting for prices. Today, although the EU now has three times more member states, its world GDP share has plunged to 16pc.
The Commonwealth has fared differently. In 1980, its members made up 15pc of the global economy. Today, the figure is 18pc.
This historic group is often derided as a throwback to an era of pith helmets and waxed moustaches. Yet, having held its own as the West has declined, the Commonwealth now outranks both the EU and the US in terms of global market share – and there’s much more to come.
Why? Because demography is destiny. The EU has shrunk dramatically in relative economic terms, as its population profile is getting much older. The Commonwealth, in contrast, home to a third of the world’s population and two fifths of those under 40, is primed for massive future growth. In India and Nigeria, the Commonwealth boasts the second-biggest economy in Asia and the largest in Africa – the two most populous continents. Vibrant and fast growing, these sometimes chaotic nations are still building infrastructure and adopting new technologies at breakneck speed. They are at the heart of the West-to-East shift in global commerce, the economic mega trend of our time.
Those who scoff that Commonwealth nations are geographically distant ignore how global trade has changed. Almost total and continuous connectivity has slashed the cost of communications and information transfer inside global value chains. That’s upended world trade patterns, making old trade-bloc thinking increasingly irrelevant. The Commonwealth is “the future” because, in this context, countries with a common language and legal code, strong cultural affinities and blood ties can thrive when they trade.
A study by McKinsey Global Institute found that soaring trade flows of data and information, connecting this new world of fragmented and dispersed production, now generate more economic value than the whole of global trade in physical goods. This is a crucial shift to grasp, not least for a services-oriented economy like Britain.
It means our long-standing Commonwealth relationships, different now but still strong, are of enormous potential value. We need not choose between the EU or the Commonwealth. The UK will keep trading with Western Europe, even if Brussels bull-headedly denies us a free trade deal for the first few post-Brexit years. UK-EU trade would then be under World Trade Organisation rules, which is no disaster. We trade under WTO rules with the US – Britain’s biggest single-country trading partner.
Being outside the EU, though, crucially allows Britain to cut our own trade deals with Commonwealth nations and other emerging giants like China, identifying bi-lateral issues and opportunities, free of limitations.
The EU, for instance, has no free trade agreement with India or Brazil, because continental farmers are determined to protect agriculture at all costs. Released from the absurdly rigid Common Agricultural Policy, Britain can strike deals with such nations to mutual advantage.
Finally in charge of our own borders, we can also negotiate with India over student visas and the like without the uncertainties of the EU‘s open borders. The ubiquity of English law and language, and strong Commonwealth links, put the UK in a strong position to negotiate trade deals with the rest of the world. These will help secure better access to the fastestgrowing markets on earth, the economic superpowers of tomorrow, with Britain gaining market share in nations already accounting for the majority of global commerce. Those who sniff at this Commonwealth network have no clue about the trajectory of global commerce.
Over the coming three decades, the EU will account for just a tenth of global growth – with the other nine tenths elsewhere. Raising our sights from this moribund structure, and channelling our commercial and diplomatic acumen in a way that reflects the emerging global economy, will win Britain far more trade than we lose. Of course, commerce with the likes of Australia, New Zealand and Canada will rise after Brexit. Britain’s affinity with such nations, as with the US, will bend but never snap. But it is doing business with the emerging markets that will generate prosperity for our children and grandchildren.
One danger we face is a lack of imagination and self-awareness. The disgraceful treatment of the Windrush migrants shows British administrative dogma at its worst. The world is watching and Theresa May, on behalf of the nation, must sincerely apologise.
Another is that de haut en bas streak that has long since lurked within the British establishment. Ultra-remain peers are trying to block Brexit, keeping us in the EU‘s protectionist customs union. As such, they are denying Britain the chance to forge our own trade policy, to use our financial acumen and unique ties, across the Commonwealth and beyond, to play a far bigger commercial role.