Last month, Brazil’s Finance Minister Guido Mantega arrived in London for talks with government officials as well as fund managers – Nick Mason, a Latin America fund manager at Invesco Perpetual included – to emphasise the positive, stable case for further investment in his country.
Money out…
This was just one leg of a global tour on behalf of a government looking for one trillion Brazilian réals (£338bn) of investment by 2015.
Outwardly, Brazil is one of the stronger economies, wrapped up as it is in the whole ‘emerging market economies are stronger and growing quicker than developed economies are’ maxim. In fact, even with a recent average of 4% growth a year it needs to grow by twice that figure if it is to accommodate its future plans and avoid going backwards.
Despite our own domestic headlines dominated by the UK avoiding a triple-dip recession, sneaking in and out of a double-dip recession at the same time and the general woes of growth measured in basis points rather than full percentage points, Brazil – and others – still recognise the UK as having the sense and ability to invest abroad.
By the same token, those countries with a bit of spare cash floating around – Qatar is the latest – see the UK as a good investment bet.
Qatar makes its money from its stocks of liquefied natural gas – it has up to a third one of the world’s total gas reserves – that is also one of the very things that is causing UK household bills to rise and eat into existing savings – rising energy prices.
…money in
Its government is in talks with our own Mr Cameron over a potential £10bn investment that will include spending on transport infrastructure, a nuclear plant in Somerset, and even a sewer going under London. What makes this investment different to previous Qatari UK propositions is the prospect of building a specific fund to finance government-backed schemes.
According to TheCityUK, the total amount of direct global sovereign wealth fund investment is at a six-year low, although the UK continues to attract a growing amount of money into real estate from SWFs based in China, Korea, Azerbaijan and Norway.
Chancellor George Osborne is to deliver his Budget next week and I am sure all we hear will be about austerity Britain, how it was not his fault that the UK is in the economic position it is, and generally how we will have to tighten our belts for a lot longer than we had hoped.
The fact that we are not stagnating economically is because there are people out there with deep pockets – and long may that continue – though Osborne’s Budget will probably need to check out exactly how deep they are.
