Policy paper

Visit of the Chancellor of the Exchequer to Brazil, 7-9 April 2014

Published 17 April 2014

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This policy paper was withdrawn on 18 June 2014

This document is no longer current.

The first visit to Brazil by a Chancellor for many years is an opportunity for him to see the huge opportunities and challenges of Brazil, the fifth largest country in the world with the fifth largest population and on its way to being the fifth largest economy.

The Chancellor will visit a Brazil, with 2% GDP growth per year under Dilma, compared to 4% under Lula, because of tighter credit and lower commodity prices. The current account has worsened to 3.7% of GDP and Brazil’s debt downgraded to BBB-. But what matters electorally is inflation, currently 5.7% and unemployment, very low at 5.1%. The social gains have been remarkable, with poverty and extreme poverty declining, the Gini co-efficient falling (the only BRIC where this has happened), albeit from a high base, and life expectancy increasing from 65 to 74 in the last 20 years.

People want change. That’s why millions of Brazilians took to the streets last summer, frustrated at high tax and corruption.

The catalyst for the protests was, to general astonishment, the Confederations Cup. With the opening World Cup game 70 days away, football mad Brazilians worry whether it will be worth it. Once the opening whistle blows the enthusiasm will arrive. The protestors last year called for FIFA standard hospitals and schools, not stadia.

The UK’s relationship with Brazil has been transformed in recent years. Exports grew by 64% 2009-12, tourism to the UK more than doubled 2007-12, student numbers have gone through the roof, mostly funded by the Brazilian taxpayer. BG and Shell alone are investing around $50 billion, mainly in offshore oil and gas. Ministerial visits have doubled in this Parliament, including the Prime Minister, the Deputy Prime Minister, the Foreign Secretary (twice) and now the Chancellor.

The Chancellor’s visit is an opportunity for him to learn about the reality of Brazil and to promote our interests in

• Exports and investment, especially in oil and gas, marine, sports and infrastructure, with UKTI supporting businesses to win over a £1bn of contracts in the last 12 months.
• Financial services.
• Science and education, with the global launch of the Newton Fund and the increased support by British companies for Brazilian students.
• Sport, both in Olympics co-operation and at a human level through the work done by Brits for the forgotten and abused.

Above all, the Chancellor’s visit is an opportunity to show Brazilians that we are in it for the long haul.

0.1 Disclaimer

The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.