Source: CGTN    Published: 2023-09-10

CGTN: And speaking of problems in the Western economies, I just have to ask you this question about an incident that took place in your home country. Birmingham, Britain's second largest city, has declared itself bankrupt, basically, and it has stopped all nonessential spendings. So, what happened? I mean, Britain is the world's 6th largest economy. What went wrong here?

John Ross: Well, because this is quite a long story, we have to go right back to the election of the Conservative and Liberal government way back in time about more than 10 years ago. They embarked on policies of austerity which have been totally unsuccessful economically. The economy is growing very slowly. Then you had the very, very big setback of Brexit, which was completely irrational from the point of the economy, leaving the European Union, Britain's largest market, which did damage to the economy. Therefore, the economy has been growing very, very slowly.

And therefore, you've got a situation which is a great deal of strain on all the finances of major cities in Britain, and Birmingham happens to be the one which is worst of all and therefore it's gone bankrupt. But it's not the only city economy in Britain which is facing economic problems at this time. It's a symptom rather than being something totally unique and special. Of course, it has some specific features, which is what made it the worst, but it's going to be set against the very bad performance of the UK economy.

CGTN: Since you talked about the global slowdown, I just want to ask you: Is this bankruptcy going to have a ripple effect across the Western world? You talked about it, there's a slowdown in the economic development of the developed countries. Are we going to see matters get worse? And what should we do about it?

John Ross: No, Birmingham by itself is not going to have a ripple effect. It's too small. Birmingham is a symptom rather than the cause of this problem. Much more serious, for example, was in the United States, this year, we've had two out of the three biggest bank collapses in U.S. economic history, and that's got a much bigger effect than Birmingham.

The problem is, the very slow growth has put in all sorts of strain into the financial system of many countries. In addition to the bank collapses in the United States, in Europe, we have almost no growth. The fastest growing economy in Europe over the last four years, that’s Italy. It has only grown by 1.5 percent, which means it’s almost close to stagnation.

And the other European economies are doing worse. As to what the developing countries have got to deal with this, they will become less dependent and need to become less dependent on what happens in the developed countries. That's the importance of the Belt and Road Initiative. That's the importance of BRICS. There is already a tendency in the world economies for the developing countries to go more rapidly, to grow more rapidly than the developed economies. And this is going to strengthen. So, strengthening South-South ties is the most important thing for developing countries to do.

John Ross is a senior fellow at Chongyang Institute for Financial Studies at Renmin University of China.