Britain is winning the fight against racism. Photo: Getty
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Britain is becoming less racist

Demographic change is defeating racism, and racial prejudice is particularly rare among university graduates.

“If you want a nigger for a neighbour, vote Labour.” So said a slogan used by the Conservative party candidate Peter Griffiths 50 years ago.

And it worked, too. In the 1964 general election, there was a three per cent swing to Labour. In Smethwick in the West Midlands – the seat which Griffiths contested – there was a seven per cent swing recorded in favour of the Conservatives.

Such an appeal to racism could only have worked if the electorate had racist tendencies. At the time, Smethwick had the highest concentration of recent immigrants of any county borough in England. Most people did not like it. As Dominic Sandbrook’s history of Britain in the 1960s White Heat notes, in Smethwick “Most pubs excluded black drinkers from their lounge bars, and some barbers even refused to cut their hair.”

Britain has come a long way since. But there are concerns that economic uncertainty is leading to a hardening of racial attitudes.

That was the backdrop for this year’s British Social Attitudes Survey. It found a small upturn in self-reported racial prejudice, from 26 per cent in 2012 to 30 per cent in 2013. The results were published a week after Ukip’s victory in the European elections; predictably, the two were linked together as evidence of a rise in British racism.

It is not a narrative that stands up to scrutiny: 38 per cent of respondents to the BSA Survey in 2011 reported to feeling racial prejudice so the figure in both the last two years has shown a significant drop. An analysis of attitudes to racial intermarriage by Rob Ford, published this week, also reveals a far more positive picture. While almost half of those born before 1950 oppose marriage between black and white people, only 14 per cent of those born since 1980 do. Opposition to marriage between white people and Muslims has fallen from 66 per cent to 28 per cent among the different age groups.

It suggests a country that has become far less racist. And it is a trend that demographics may be accelerating. Only 25 per cent of those born after 1980 admit to harbouring racial prejudice, a lower percentage than all older generations.

Racial prejudice is particularly rare among the better educated. Just 19 per cent of graduates admitted to racial prejudice, compared with 38 per cent of those without qualifications; one legacy of the fabled target of sending 50 per cent of school leavers to university is to make racism less pronounced – or, at the very least, less acceptable. Unsurprisingly, graduates are also significantly more likely to hold favourable attitudes to immigration than everyone else.

None of this is to deny that fundamental racial inequalities remain in Britain today. Ethnic minorities make up 12.9 per cent of the UK population but just 4.2 per cent of MPs. In 2010, ethnic minorities were three times less likely to vote than white Britons. But even in these areas, progress is being made: groups like Operation Black Vote and TickIT are working to increase voter registration. There have never been more ethnic minority MPs.

At a time when America’s racial problems are flaring up once more, Britain’s progress, though not complete, should be a cause for celebration. After all, 2014 saw the BNP lose their representation in the European Parliament.  

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

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Why might you invest in Europe?

At Henderson we believe the European market is a fertile hunting ground for investment opportunities. The market’s depth and breadth, with its regional variations and, at times, political uncertainty, means our fund managers have plenty of choice when it comes to picking stocks. Two of our investment trusts with a European focus include Henderson European Focus Trust, managed by John Bennett, Head of European Equities, and Henderson EuroTrust, managed by Tim Stevenson, Director of European Equities. Here we explore some of the factors that make the continent attractive.

1. The ECB’s continuing support

The euro area could claim only but a few fans a year ago. Investors fretted over deflation and depression, spurred, ironically, by the collapse in oil prices. What followed was a European Central Bank (ECB) showing willingness to explore extraordinary monetary policy measures, beginning a massive quantitative easing programme, initially involving monthly injections of €60 billion into the system and recently increasing to €80bn, through the purchasing of government and corporate debt with the aim of driving down interest rates, stimulating bank lending, getting the Eurozone economy moving again, boosting investment, creating jobs, and fighting off the spectre of deflation.

While not the saviour of Europe’s underlying structural problems, Europe’s markets appear set to benefit further from the ECB’s continuing loose monetary policies, with inflation well below the central bank’s target of 2% and QE likely ending in 2017, coming right at the point when the US and UK are on course to diverge and tighten theirs.

2. Currency weakness is helping all round

The ECB’s action has coincided with a substantial fall in the value of the euro. The chart demonstrates the Euro’s value against the dollar:

Chart 1 – The value of the euro against the dollar remains low relative to history

Source: Thomson Reuters Datastream, as at 18 April 2015

This is a great stimulus for European exporters, whose products and services become cheaper and more competitive in overseas markets, boosting exports to the US and UK at the same time as insulating others against the downturn in emerging markets. Ultimately this should feed through to better sales and profits.

3. Low oil prices

A sustained period of low oil prices would be a major positive for most European economies, putting more money into the pockets of consumers, while also helping to reduce the region’s notoriously high energy costs – Europe is the world’s largest net importer of oil and related products (approximately $406 billion in 2014). There are concerns, however, that lower oil prices could fuel a deflationary trend, while falling oil prices have had a negative impact on oil producers and oil services companies based in Europe.

Chart 2 – Falling oil prices - good for businesses and consumers, but possibly deflationary

Source: Datastream, Brent crude oil price, US dollars per barrel, as at 18 April 2016

 

4. Valuations remain relatively attractive when compared to the US

As mentioned, Eurozone stock markets have had a great run, and they’re certainly no longer as cheap as they’ve been in recent years. However, says Jason Hollands of broker Tilney Bestinvest, they remain “relatively attractive compared to US shares”.

Stock-picking remains key. The prodigious appetite for alternative income amid low yields and low interest rates, not-to-mention also quality stocks, means price ratios, a measure of how expensive stocks are relative to history, are being propelled ever higher. Rising share prices also mean fund managers need to be increasingly selective in building their portfolios – so it makes all the more sense to channel your money through a highly regarded European manager with a reputation for successful stock-picking.

Indeed, John Bennett, European fund manager at Henderson Global Investors, believes stock-picking is set to become all the more important in coming months.

“2016 has already seen a significant pick-up in volatility, so investors should brace themselves for difficult markets”, he says. “That is why I think stock picking is so important. By understanding a company’s strengths and weaknesses, we can seek to be better positioned than the general market both in good times and bad.”

 

5. Companies have reach beyond Europe

The global reach of European companies is evident in the breadth of their sources of revenue, with European-listed businesses deriving just over half of their revenues from overseas. This allows European fund managers to pick the companies with exposure to the regions with the most compelling opportunities – both domestic and global. It means that if the businesses are well managed ones – which our fund managers aim to pick – they can continue to outperform in falling as well as rising markets.

 

6. Companies are buying one another

Merger and acquisition (M&A) activity picked up steadily in 2015 and has continued into 2016, with Europe registering its highest level of deal activity since the 2007/2008 financial crisis. CEOs tend to open-up their corporate wallets when they’re feeling more confident about the business environment or the economy or when finance is cheap. In Europe deal volumes have been boosted by a combination of low oil prices, the strong US dollar and optimism about Europe’s economic prospects - a positive sign.

 

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.
The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Nothing in this document is intended to or should be construed as advice.  This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.
Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.