I recently had the honour of hosting Enrique Peña Nieto, the Mexican President, at the City of London State Banquet. It was a fitting time for such an event: the Latin American economy is particularly vibrant at the moment, with many opportunities for extremely exciting partnerships. During our discussions we touched on a number of ways for the City to support Mexico’s growth.
"Mexico is an illustration of the region’s immense promise and its economy looks very positive at present…"
Only last year my predecessor as Lord Mayor, Dame Fiona Woolf, visited Latin America and I will follow in her footsteps in July this year, taking in Mexico, Peru, Columbia and Brazil. Like all my overseas visits I will be accompanied by a delegation of senior British business leaders, and together we will try to drum up more business for the “Square Mile’s” world-leading companies.
Mexico is an illustration of the region’s immense promise and its economy looks very positive at present. It is an open market for companies with an international outlook and there are exciting opportunities for firms offering financial and professional services. It also remained remarkably resilient during the financial crash, a resilience that owes a great deal to its sound regulatory framework, solid management of public finances and taxation reforms. These rapid changes are mirrored to varying extents across the rest of Latin America, which is enjoying far strong economic growth than Europe.
Fortunately, the UK is in a good position to take advantage of this encouraging economic outlook. One factor is our strong historical links. London was a centre of activity for the leaders and supporters of independence movements across Latin America, in time becoming more closely associated with the movement than any other world power. For Mexico in particular we were the first European country to recognise the country’s independence in the mid-nineteenth century, a relationship that is still important to Mexican administration. Indeed President Nieto has previously said that the UK is one of ‘Mexico’s closest allies.’
But our position is strong for other, more current reasons as well. Backed by a supportive government, our ambitious companies are extremely keen to trade with Latin America. Through the government’s efforts with the ‘Canning Agenda’ to re-balance the economy, and move it away from its heavy reliance on the EU, we are now seeing more focus on Latin America. We’ve opened new Embassies in countries like El Salvador, Paraguay and Haiti and a Consulate-General in Recife, Brazil. And we’re creating new networks of trade experts to identify and promote trade opportunities for UK companies.
Despite its current woes, the EU remains the world's biggest economic bloc, accounting for around a quarter of global GDP. It is the biggest investor in Latin America, accounting for 43% of all foreign direct investment in the region. In fact the EU invests more in Latin America than in China, India and Russia combined. This trend is likely to continue with the EU recently signing a number of trade agreements with Latin American countries.
A lot done – more to do
Yet things are not always as good on the surface as they seem. The UK still trades more than twice as much with Belgium than we do with the whole of Latin America. As the former Foreign Secretary William Hague put it, “for too long the British presence in Latin American has been too small, too reticent and too modest.” Latin America can offer UK companies huge growth opportunities, yet, UK exports make up little more than 1% of Latin America’s total global imports.
One of the key messages that I want to get across during my year as Lord Mayor is that the City can be Latin America’s partner of choice.
Take an area like public private partnerships (PPP). The City has a wealth of expertise and knowledge in the innovative financing models that are needed to get visionary construction and infrastructure programmes off the ground. One good example is the transport network in the Colombian capital, Bogotá. At present Bogotá lacks an underground system. This undermines local efforts to create a thriving economic hub as reliable and fast public transport is a key driver of urban growth. When the time comes to make a decision, the City’s firms will be there to help raise this finance and get these projects off to a quick start.
Some people talk about global trade as a competition where one country’s success is another’s failure. I don’t agree. I think we’re all in the same boat, facing similar challenges and opportunities. Companies in the UK and Latin America, for example, all have to find and tread a path to sustainable economic growth and support a modern market economy, with a good standard of living and opportunity for all. Those are universal aims.
But we are still a long way away from the ambitious global trade target of £1trillion in exports by 2020. So my message is simple: get out there to new markets, because we in the City are fully behind you when you take that ambitious step and trade with the world. As I said at Mansion House recently to the cheers and nods of agreement from an assortment of powerful and influential business leaders in the room – UK plc has always been faced with a choice: be open and thrive, or wear blinkers and fail.