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Page last updated at 16:14 GMT, Monday, 12 December 2011
The rise of the 'dynamic middle'

Adam Shaw
Reporter, Panorama: How To Survive The Meltdown

Amid despondency over the economic downturn and the future of the euro, not many people are talking of future paths to prosperity.

Adam Shaw on a train
Adam Shaw asks, could British industry fuel the economic recovery?

Compilers of the Oxford English Dictionary declared 2011's Word of the Year to be "squeezed middle" - referring to those hit by inflation, wage freezes and cuts in public spending.

And yet many believe the phrase which defines this generation, as opposed to this year, could be the "dynamic middle."

They predict that if anything is to rescue the economy, it will be the buying power of an exploding middle class.

Jim O'Neil, chairman of Goldman Sachs Asset Management, told me: "We think we are probably less than a quarter of the way through the most remarkable growth of middle classes that the world will have seen for many decades, if not centuries. In the next 30 years, there will be three billion people entering the global middle class. This is extraordinary."

Find out more

Adam Shaw presents Panorama: How to Survive the Meltdown

BBC One, Monday 12 December at 8.30pm

The problem is that despite 10 years of talk about the expanding economies of Brazil, Russia, India and China - collectively known as the Bric countries - we have done remarkably little to capitalise on the opportunities their burgeoning middle classes represent.

Mr O'Neil says: "Germany now exports more to the Brics than it does to France. Here in the UK, by contrast, if you add all the Brics together, we export about the same to them as we do to Ireland."

Shadow chancellor Ed Balls says the UK needs to be more aggressive in our approach to the Bric economies.

"China Brazil, India, these are countries which are growing and investing," says Mr Balls. "If we lose the race to new technologies and new industries, we'll never ever catch up again. That's why I think it's so important to act now and to start investing where the new jobs are going to start coming from."

JCB digger
JCB make the most popular diggers of their kind in the world.

Some businesses have already capitalised on the markets where most growth is happening.

I visited JCB, which sells three-quarters of all its machines abroad.

They make the most popular diggers of their kind in the world, and export to 150 countries. Their chairman Sir Anthony Bamford told me: "When we went to India 30 years ago, we used to sell 50 machines a year; last year we sold 27,000 machines in India."

The point is that we can rebuild our economy in the same way that JCB has built its business. It is not just heavy industry that can access these markets.

I also went to see how one of our oldest industries is coping with this newest of challenges.

Royal Crown Derby began around 1750, when the Huguenot, Andrew Planche, established the first china works in Derby.

The company's history has followed the rise and fall of British manufacturing in general. It is unable to compete with the cheap production in East Asia and has therefore placed itself firmly upmarket, selling some eye-wateringly expensive porcelain to the Bric markets.

A lecturer from the China European International Business School, Dr Chen Junsong told me: "China is a very, very large market for European brands including clothes, fashion products, watches and even automobiles. China right now is the second largest market for BMW, for Audi, for Mercedes."

In Britain, we have been slow to move into those markets, but the opportunities are there for the taking if we are bold enough to move quickly.

Panorama: How to Survive the Meltdown will be broadcast on Monday 12 December at 20:30 GMT and then available in the UK on the BBC iPlayer.



SEE ALSO
What is the future for the BRICS?
Wednesday, 30 November 2011, 10:13 GMT |  Business
Why is Russia in the Bric club?
Tuesday, 7 June 2011, 17:08 GMT |  Business
Nigeria could 'soon' be next BRIC
Monday, 12 December 2011, 13:00 GMT |  Business

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