Welcome to a brave new Blighty — where globalisation rules

http://www.theage.com.au/news/opinion/j ... 41560.html
James Button
September 10, 2007

A HUGE experiment is under way in Britain, one not all the locals like, though it seems to be doing many of them good. It is the transformation of the country into one of the most open, globalised nations in the world.

New figures show that last year a record 574,000 people came to Britain to live — nearly 1 per cent of the population. Australia, by contrast, took in 130,000 migrants last year — 0.65 per cent of its population. And Britain is a much smaller island. What's more, Britain's figure does not count the 600,000 workers from Eastern Europe who have arrived since 2004, turning the lingua franca of farms, building sites and cafes into Polish. Catholicism may soon be Britain's most popular form of worship again, after nearly 500 years in the sin bin.

But British immigration is countered by emigration. Last year a "staggering" 385,000 people left the country for good, according to Brits Abroad, a report by the Institute of Public Policy Research.

One in 10 Britons now lives abroad, a diaspora twice as large, proportionally, as the Australian one. Nearly 700,000 Britons live in France, 800,000 in Spain; only Australia has more (1.3 million). Low-cost airlines and £10 flights have sparked a continental real estate boom in Britain. TV shows spruik the benefits of buying apartments in Bulgaria.

No wonder Britain has the world's busiest airport — Heathrow. One in five of all international flights lands in or leaves Britain, as 90 million people make journeys in and out of the country each year. The Brits Abroad report calls Britain the crossroads of the world.

The driver, as ever, is money. Jobs are pulling people in; new wealth is luring people out. As Prime Minister Gordon Brown never tires of saying, Britain's GDP per head was bottom of the G7 (now G group of nations when Labour took power in 1997; today it is second.

Although the fruits of the boom are by no means equally distributed, it is still dizzying change in a country where, a mere 40 years ago, two-thirds of people defined themselves as working-class. The cockney flower seller on our street corner takes her annual holidays in Dubai.

Britain has probably liberalised its economy more than any other European country. While France has fought to keep its big industries in French hands, Britain has let them go. The 200-year-old P&O shipping company was bought last year by the Dubai Government. The Chinese own Rover, the Germans Bentley and Rolls-Royce.

In the home of the industrial revolution, since 1997 manufacturing has fallen from 21 to 14 per cent of GDP, compared with 22 per cent for the whole European Union. The Brits hardly make anything any more. Instead, they do a lot of trading and talking. Dominated by education, tourism, business services and above all, finance, the economy seems to run on air.

Several studies, including one commissioned by worried New York mayor Michael Bloomberg, show London is poised to overtake New York as the world's financial capital. The Brits have become expert at handling other people's money. And with few questions asked.

From 2002, as the US tightened its rules on financial disclosure and directors' responsibilities after Enron and other corporate scandals, money has fled the US for less regulated, looser London.

Similarly, relaxed tax laws have turned Britain into a tax haven for the world's wealthy. The country now has 68 billionaires, three times as many as four years ago. Only three of its 10 richest people were born in Britain.

Prominent among the arriviste rich are the Russian oligarchs, fugitives from Vladimir Putin, who are snapping up country estates, and reportedly a fifth of all houses sold in London worth more than £5 million ($A12.3 million).

Their purchases have fuelled a dangerously overheated housing market. Britons are deep in debt: last month it was reported that the value of debt from loans and credit cards had for the first time passed the value of GDP. It could all still end in tears. Government spending on redistribution has kept rising inequality in check but that would change if the economy turns down.

Change has produced much fretting about national identity and whether Britain will hold together. Traditionalists lament a new vulgarity, a cashed-up and boozy hedonism, especially in London.

Certainly the capital is pulling away from the rest of the country. Like New York or Hong Kong, it is becoming a city state, separate from the hinterland and sometimes distrusted by it.

In the next decade, 80 per cent of all immigrants are expected to go to London, where a third of the population is non-white. By contrast, the non-white population of Britain as a whole is only 8 per cent, about the same as in Australia. You don't have to drive far into the countryside before black and brown faces virtually disappear.

Immigration may be the country's most volatile issue.

For years there have been warnings of an imminent anti-immigration backlash. In polls voters regularly put it near the top of their concerns. Yet for all that, the issue never seems to gain enough momentum to significantly shift government policy. The Conservatives ran hard on big cuts to immigration in the 2005 election and lost.

No doubt the rate of immigration will vary over time. But people flow is probably a permanent feature of modern life, too important to the economy and human needs to be stopped. That seems to be one of the lessons of Britain's relatively sudden, but deep, embrace of globalisation.

James Button is Europe correspondent.