We live in an increasingly inter-connected world. Britain has always been an outward-facing nation with international interests and responsibilities, and extensive overseas trade and investments. But the pace and scope of globalisation means that, across an ever-increasing range of activity, the well-being of people in the UK is directly affected by what happens elsewhere in the world.

The FCO has a key role to play in making sure that the Government:

• fully understands these trends
• is able to influence them
• manage the risks and
• harnesses the opportunities.

We are also actively involved with the much wider range of those with an interest in foreign policy and international developments, from business to religious groups, non-governmental organisations and international citizens. Globalisation is dispersing power towards these groups.

Globalisation brings opportunity and risk

As trade, capital, people, information and culture become more globally mobile, this opens up significant markets for British goods and services. It also speeds up technological progress and creates commercial opportunities in developing countries, which will lift millions of people out of absolute poverty. By 2030 it is estimated that 90% of the world’s labour force will live in the developing world, with China and India together accounting for 40%. China is likely to be the world’s second largest economy by 2020, with India as the sixth largest. These economic trends are shifting the global balance of power towards Asia. The growth of emerging economies opens markets for strong, competitive companies, while consumers benefit from cheaper manufactured goods and services.

However, these emerging economies have increased competition within the global economy, raising the risks of a protectionist response (that is, governments adopting measures to protect home industries). Rapid growth can also lead to inequality within and between countries. Globalisation has also made the trafficking of drugs, people and arms possible, and made it easier for criminals and terrorists to move across borders. Recent events have shown how financial instability can rapidly spread from one region of the world to another. As we have seen, problems starting in the US sub-prime mortgage market led to difficulties in lending between banks across the world. This episode has highlighted the challenges that interconnected financial markets bring for those markets and regulatory authorities across the world.

Continued population growth fuels migratory pressures

The world’s population continues to grow at a fast pace. The global population is expected to increase from 6.5 billion in 2005 to 7.7 billion in 2020 and then to 9.1 billion in 2050. In the period to 2020, 38% of this growth to 2020 is expected to be in Africa, with rapid growth also expected in the Middle East. The challenge is that the countries experiencing the most significant growth are also those least likely to cope with the corresponding pressures on land, resources and services. By contrast, parts of Europe and East Asia are already seeing declining populations, and the social and financial pressures this brings on their economies.

Alongside changes in population numbers, there is a trend towards increased urbanisation (in other words, living in towns and cities). Most of the African population growth will occur in urban areas, doubling the urban African population to more than 700 million by 2030. By 2015 five of the six largest cities in the world will be in Asia, India and Latin America. The UN expects the number of people living in urban slums to double to 1.8 billion by 2030. In sub-Saharan Africa, urban population growth could lead to an increase in the number of people living in absolute poverty.

Such population growth is increasing pressures for migration. This presents opportunities for countries like the UK to attract highly skilled workers, who can help support an increasingly ageing population and contribute to social and cultural vitality. However, migration needs to be managed to maximise its benefits and minimise the risks. Britain also has a high number of people migrating abroad, which contributes to our role as a ‘global hub’ for the world economy.

Terrorism, WMD proliferation and conflict pose major challenges

The UK faces a serious and sustained threat from violent extremists, claiming to act in the name of Islam. Our task is to undermine their appeal and to strengthen our – and our partners’ – abilities to disrupt their networks and protect the UK’s interests overseas from attack. Terrorist groups continue to try and acquire weapons of mass destruction (WMD), which reinforces the need to strengthen international efforts to prevent this.

While the overall number of conflicts has declined since the end of the Cold War, conflict, particularly within states, continues to threaten development and contributes to wider global instability.

Environmental pressures demand growth in alternative energy

Environmentally speaking, the world is living beyond its means. Climate change is accelerating, affecting global wealth and security and this directly affects British interests. The Stern Report suggests that if the effects of climate change are not reduced, climate change will cost the equivalent of a 5 to 20% reduction in global consumption per person by 2100. Developing countries are expected to be affected most rapidly and with more devastating results. Drought, flooding, higher instances of disease and a serious loss of food productivity are predicted.

Environmental damage also continues, with significant destruction of forests and a decline in biodiversity (diversity of plant and animal life) taking place in developing countries. The global demand for energy is expected to be 53% higher in 2030 than it was in 2004, largely due to growth in emerging economies. The UK will become increasingly dependent on energy imports as our domestic supplies run out. This means we will have to manage risks from:

• higher and more volatile energy prices
• potential disruptions to supplies due to disputes, accidents or sabotage and
• nations using energy as a bargaining tool in negotiations.

The UK’s increasing dependence on energy imports also means that we have to invest in carbon markets and other energy technology (for example, wind farms and water power).

Technological advances create new international networks

Technological innovation and the spread of technology across the globe continue to drive significant changes, such as increasing prosperity, allowing information to be shared across continents and helping us to tackle disease and food shortages. Biotechnology (such as the genetic engineering of micro-organisms) and nanotechnology (such as molecular engineering) are key future advances that could transform living conditions for all of us. The spread of information and communications technology is already helping to transform developing countries, by linking them to the rest of the global economy.

Technological advances have enabled people across the globe to connect and communicate with a range of international networks, sharing ideas and socialising. For example, the number of internet users worldwide has risen from 16 million in 1995, to 1.173 billion in mid-2007, and is expected to reach the two billion mark by 2011. These exchanges strengthen the ability of civil society and individual citizens to participate in debate and policy formulation.

As a result of these developments, events that happen abroad have a more direct impact than ever before on the lives of people in the UK. There are exciting new opportunities to tackle global challenges and for collaboration on technological advances. However, technological change also brings risks. As the world becomes more reliant on complex technological systems, it also becomes more vulnerable to criminal and terrorist groups exploiting the flows of information.

Global mobility makes the FCO’s consular work all the more important. The number of people travelling on long-haul flights to and from UK airports has grown from 32 million in 1996 to 47 million in 2006. The UK has the third highest number of outward travellers of any country in the world. Our citizens are travelling abroad in greater numbers, and they are also going to more difficult and dangerous places. Our staff are helping more people every year who are the victims of crime, accidents or natural disasters.

The issues outlined here represent just some of the general trends that are affecting the UK’s interests at home and overseas. The FCO is itself changing so that we reflect these trends in our priorities and resources.

Better World, Better Britain: the FCO’s new strategic framework

When David Miliband took over as Foreign Secretary in June 2007, he set in hand a review of the FCO’s strategic priorities. This began with his first speech, on 19 July 2007 at Chatham House, where he invited staff and stakeholders to consider the key issues on which the FCO should focus and where the FCO could add the most value.

The review drew on the views of external experts from academia, non-governmental organisations and businesses. FCO staff across the network, along with partners across Government, also contributed to the debate.

This review complemented work already under way to respond to the results of the FCO’s Capability Review in March 2007, and the outcome of the 2008/11 Comprehensive Spending Review.

One of the key messages of these discussions was the conclusion that the existing framework of ten international strategic priorities was no longer appropriate. This framework had first been set out in the 2003 white paper Active Diplomacy for a Changing World [pdf 839.4kb, new window]. Although the framework had been useful in helping the FCO plan its work and allocate its resources, there was agreement that we needed a new framework to drive our work forward.

The new strategic framework consists of three core elements.

1. A flexible global network of staff and offices, serving the whole of the British Government.

This is a national asset that allows Britain to operate effectively across the world. Our network of 260 posts in 145 countries not only delivers on our traditional foreign policy agenda, but also on the enormous range of economic, social and security issues that affect British citizens and businesses abroad. This network is also responsible for the security and good governance of the Overseas Territories.

2. Three essential services which:

• support the British economy
• support British nationals abroad and
• support managed migration for Britain.

We deliver these services through UK Trade & Investment (UKTI), UKvisas, our consular teams and the Borders and Immigration Agency (BIA).

3. Four policy goals, to:

• counter terrorism and weapons proliferation, and their causes
• prevent and resolve conflict
• promote a low carbon, high growth global economy and
• develop effective international institutions, in particular the UN and the EU.

These are the FCO’s priorities in advancing the UK’s foreign policy, through which we aim to shape the international agenda, to protect our citizens, promote our economy, and spread our values. The FCO’s embassies abroad also have an important role in working on behalf of all government departments to deliver their objectives abroad.

Together these elements provide our new set of Departmental Strategic Objectives (DSOs) agreed with HM Treasury. These are the basis on which the FCO – like all government departments – receives its funding from the taxpayer, and against which its performance is judged.