THE UK is one of only two major world economies set to become less connected to the global economy, a report reveals this morning.
Globalisation will continue to advance in the next three years, according to the Ernst and Young report, with medium-sized emerging markets expected to become notably more connected with other countries.
But immigration restraints in the UK and the US are likely to cause both states to slip down the group’s Globalisation Index.
Since before the last general election, the Conservatives have pledged to reduce net immigration to “tens of thousands” per year, while figures in recent years have exceeded 100,000.
New laws in the US and the UK “will impact on the hiring of foreign nationals,” Ernst and Young expects.
Overall, however, the report reveals that governments in the world’s 60 largest economies have so far avoided reacting to the economic slowdown with more protectionist measures.
Yet nine in 10 business executives still fear the rise of trade barriers if a double dip recession strikes.
“While globalisation continues apace regardless of weaker growth around the world, the spectre of protectionism remains a threat,” commented James S. Turley, chairman and CEO of Ernst and Young.
“Businesses and governments have to continue to make the case for globalisation as a positive force.”
“It’s not just tariffs and quotas anymore,” said Simon Evenett of Global Trade Alert. “Measures to stimulate the economy have also had unintended protectionist consequences – US quantitative easing, for example, has provided a cover for a lot of countries to react, both in terms of international finance policy as well as trade policy.”