My Lords, I thank my noble friend Lord Jenkin for securing this important debate and congratulate him on his excellent speech. The Motion covers many areas vital to the UK economy. My contribution will focus mainly on the importance of trade.
I have visited a number of countries in the past two years where I have been privileged to meet various senior figures from politics and business and to speak at various meetings and conferences. Engaging with our overseas partners has reasserted my long-held belief that one of the best ways that we can improve our financial position, both globally and domestically, is to place much greater emphasis on international trade.
Our trade surplus and global market share in key industries such as aerospace and pharmaceuticals provides us with a solid base in manufacturing and research. The City of London maintains its position as the leading venue in Europe for financial services. To maintain and develop our economic promise, we must ensure that more of our goods and services are exported. I share the view held by the Chancellor that trade is vital to our economic prosperity. In addition to continuing cuts to the rate of corporation tax, the Chancellor stated that we must help British businesses to expand and innovate and that we should aim to double British exports to £1 trillion by the end of this decade. I believe that that will play an important role in helping our immediate economic recovery and ensuring that Britain remains a strong economic force for the foreseeable future.
I strongly support the efforts of UK Trade and Investment in encouraging small and medium-sized businesses to focus on exports, with a particular emphasis on the emerging markets. It is important that we maintain our strong trade links with America and our largest trading partner, the European Union. However, it is vital that we capitalise on the growing opportunities in Brazil, Russia, India and China. Many opportunities are presented by improvement in the standard of living in countries such as India and China. Russia must not be overlooked, especially with its new-found status as a member of the World Trade Organisation. We should be increasing our exports of high-value goods and financial services to millions of potential new customers.
The success of the so-called BRICs nations is worthy of praise, but I should like to mention the 7% club. Members of that club have achieved growth of at least 7% per annum since 1998. Research suggests that economies that achieve 7% annual growth will double in size every decade and more than quadruple in a generation. It is thought that after three decades, an economy that consistently grows at the rate of 7% per annum will be twice as large as one of achieving 5% annual growth. The 7% club includes Vietnam, Ethiopia, Uganda, Mozambique, Azerbaijan, Turkmenistan, Kazakhstan, Tajikistan, Angola, Chad, Sierra Leone, Rwanda and Cambodia.
Last month, I led a delegation of British parliamentarians to Azerbaijan, where we met President Ilham Aliyev and leading figures in commerce. We also discussed the relationship between the United Kingdom and Azerbaijan, and stressed that the UK is very interested in expanding business links between the two countries. The Middle East is a region that also holds many opportunities for enhanced trade. I know the area well and frequently visit the Middle East countries.
We could do more to increase trade with Commonwealth countries. Our historic connection should serve as an advantage. However, I would add that the membership of Mozambique and Rwanda speaks volumes about the influence and prestige of the Commonwealth as a unique association in welcoming countries that do not have links with the British Empire. As I mentioned earlier, those two nations also belong to the 7% club.
What plans do Her Majesty’s Government have to enhance trade with members of the 7% club? Greater co-operation among key government departments is vital to realise our potential to identify key markets and develop and promote British products overseas. That is why I wholeheartedly support the Government’s effort to strengthen dialogue among the Foreign Office, the Department for Business and the Department for International Development. International trade missions have a great role to play in achieving those goals. We should organise more trade missions to overseas countries. I am pleased to say that I was recently able to assist in arranging a trade mission to a foreign country.
We give generously to many countries through international aid, but we must consider giving more financial assistance through properly organised trade missions. Aid and trade can go hand-in-hand. Our ambassadors and high commissioners could play a more significant role in that respect.
I have spoken about Turkey and its strategic and economic importance on a number of occasions in your Lordships’ House. The Turkish economy has been growing approximately five times faster than the eurozone average. It is identified as one of the 20 high-growth priority markets in the UK Trade and Investment strategy. The UK-Turkey strategic partnership agreement has significantly helped to boost trade with this rising regional power. UK exports to Turkey in 2011 increased by 20% compared with 2010.
On domestic affairs, I must say a few words on youth unemployment. The level of youth unemployment in Britain is one of the highest in Europe. Young people have the potential to make a vital contribution to our economy and society. It is the responsibility of those in government and commerce to work together to develop the strategy that will help our young people to weather the economic storm. I am pleased that, as from today, the Government have given powers to cities such as Leeds to regenerate their areas, which will help to create more jobs. It is important that our future economic strategy recognises the importance of small businesses, entrepreneurs and innovation to our recovery. Small and medium-sized companies play a vital role in job creation. It is therefore essential that these enterprises are not burdened by excessive bureaucracy. Cutting this and reducing the layers of bureaucracy in our public services is vital to increasing efficiency in our industries.
I declare an interest: I am the chairman of an insurance broking and financial services organisation which also specialises in Islamic finance. I am also a vice-chairman of an associate parliamentary group on Islamic finance. We need to maintain and strengthen our role in promoting Islamic finance, which is based on mutuality, ethical behaviour, transparency and the acquisition of assets, which gives it more stability. Islamic finance is worth $1 trillion globally, and in the UK we have assets worth over $18 billion. Growth in the Islamic banking sector globally is nearly 20% per annum. In the United Kingdom we have a great deal of expertise which we can offer to the world. There are therefore opportunities for our country’s involvement globally. One can argue that if financial institutions had undertaken a greater volume of Islamic products, the financial problems we are facing would probably have been less severe.
We must of course promote our financial services industry but it is also imperative that we manufacture and export specialist products, such as precision machinery and pharmaceuticals. We have the expertise and resources to produce and export such goods. We need to have a balanced economy and encourage ideas that will further promote our manufacturing sector. I believe that we need a multifaceted approach to reviving our economic fortunes. Any overarching strategy must have a greater emphasis on international trade, which I am confident we can achieve.