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DERMOT MURNAGHAN:
Ten years ago, Goldman Sachs’s Jim O’Neill coined the term BRIC, referring to the future powerhouse economies of Brazil, Russia, India and of course China. Amidst the dire economic news from Britain, the eurozone and partially the United States, it is growth in these emerging economies that has so far ensured we are not facing a global downturn. Well joining me now is the man himself, the man behind the acronym, Jim O’Neill, Chairman of Goldman Sachs Asset Management, a very good morning to you Mr O’Neill. Talking about, we are obviously focused on the domestic economy, we look at the eurozone and it all looks pretty dire but looking globally, particularly at the BRICs and others, there is still growth and there are still opportunities there.

JIM O’NEILL:
Oh without doubt, as I have been trying to point out to people for the past couple of weeks. Just in the next twelve months, collectively the change in the GDP of the four BRIC countries will be the equivalent of creating a whole new Italy in one year, which is the eighth largest economy in the world. So the momentum that is coming to the world economy from them is huge and oddly, still not really appreciated by many outside the companies that see the benefit of it for their business.

DERMOT MURNAGHAN:
So are there great opportunities then for British companies in spite of the fact that when we look, particularly at China, they are not great consumers so to speak at the moment?
 

JIM O’NEILL:
Going forward this is probably the single most important issue for the whole world economy and certainly for outward looking companies from the UK, can the Chinese grow the role of their own consumers, it is very much part of their so-called five year plan and I think that UK exporting companies, particularly ones related to consumer businesses, should be hugely focused on that and I think there is a good chance it is going to happen.

DERMOT MURNAGHAN:
So should I read into this that we should be a little more relaxed about the eurozone crisis? I want to get your take on what might happen there but should we look at the global perspective from the British point of view?

JIM O’NEILL:
I think we need to be a bit more that way. From a big picture perspective I still find myself thinking that given how outward looking the UK historically has been and with the pound having fallen so much the past few years, at least in principle the UK should be a in a really good position. The dilemma is that we have got ourselves locked into so many specific areas where things have gone wrong the past few years, it is difficult to make the transformation but we certainly shouldn’t; be as obsessed about Greece and some aspects of the euro area. China itself creates the equivalent of another Greek economy every four months so in the next twelve years Greece could disappear and China would have bought them about three times.

DERMOT MURNAGHAN:
Nevertheless though, and I know you know an awful lot about foreign currency as well, the collapse of the eurozone would be a huge boulder in the millpond wouldn’t it?

JIM O’NEILL:
I don’t want to … I mean this is extraordinary what’s going on and whilst it’s easy for me to dismiss the importance of Greece, Italy is a different story and it is because it is big but even beyond that, the interconnectivity of Italy with financial institutions around Europe including unfortunately those not in the euro area, is big so we need to hope that something happens pretty soon of a more substantive nature to stabilise all of this.

DERMOT MURNAGHAN:
There are glimmers of hope as well, perhaps even more than that, in the United States economy.

JIM O’NEILL:
I was thinking about this on the way in, that this is why it’s dangerous to blame all our troubles on the euro area. Everybody all over the world is talking about this and nothing else but I’ve just come back from being in the States for a few days again and the US economy to me looks like it is actually starting to accelerate, not dramatically and certainly a bit. They are vulnerable, not in the same degree as we are, to the euro area challenges but it is not affecting the US so it is something to do with the productivity performance and the adaptability. It also seems that their housing market problems are probably close to being behind them and with it the main banking problems in the US are behind them. We still have those issues on top of everything else overhanging us here.

DERMOT MURNAGHAN:
And do you see a way out? Have Europe’s leaders fumbled their way to something towards a solution to the eurozone crisis or will it take something more?

JIM O’NEILL:
I would like to see a much bolder stance from the ECB on it all. We can’t afford many more weeks of what we’ve had with Italy the past two to three weeks where the contagion within the financial system and banks deleveraging is showing reminiscent signs of ’08 and the European policy makers have to somehow compensate for that or try and stop it because it means that banks, we have seen the sing sheet here – banks stop lending, businesses can’t get credit and it is starting to spread around the euro area and they have got to put a stop to that.

DERMOT MURNAGHAN:
Can I just ask you with your Goldman Sachs hat on, you’ve seen the protests in many financial centres across the world, there’s one of course taking place not too far from us at St Paul’s. Now if you went round there with your nice suit on and go and have a chat with them ….

JIM O’NEILL:
I walk near it every day.

DERMOT MURNAGHAN:
… I’m from Goldman Sachs, I think you’ve really got it wrong about bankers and their contribution to society, they might say to you we regard you as the devil incarnate. Do you think we have got it wrong?

JIM O’NEILL:
Well listen, I think people have got a right to protest, given the scale of the economic weakness that we’ve seen the past few years and I was having a debate with my own son about it yesterday. People have got a right to protest, it is a democracy but I think to pin everything that’s gone wrong on globalisation and banks is very unfair. With it being close to the ten year anniversary of the BRIC thing, globalisation has taken hundreds of millions of people out of poverty and if you didn’t have a financial system with banks involved in it, that wouldn’t have happened.

DERMOT MURNAGHAN:
Indeed. Okay, Jim O’Neill, thank you very much, good to see you. Jim O’Neill there from Goldman Sachs.