‘Ladies and Gentlemen,
Thank you very much to the Konrad Adenauer Foundation and the Academy for Economic Studies for the invite. It’s a pleasure to be here today to discuss with academia, students and key experts about this exciting topic.
The UK story
All our countries have been working hard in the last decade to make our economies more competitive. This has been a multi-faceted effort - reducing business tax rates, removing barriers to enterprise, investing in infrastructure, improving education and welfare systems, reformed welfare and increasing export.
We in the UK have a good story to tell. Five years ago, the British economy had just suffered one of the sharpest falls in national output, and faced the highest budget deficit of any major western economy. That’s why we have been working on a long term economic plan which included tough choices necessary for our long term prosperity. In 2011 the Government published its Plan for Growth, which included a programme of structural reforms to remove barriers to growth for businesses and equip the UK to compete in the global race. These reforms spanned a range of policies, including improving the UK’s infrastructure, cutting red tape, root and branch reform of the planning system and boosting trade and inward investment.
These reforms are already having an impact on the UK’s global competitiveness. Since 2010, the UK has moved into the top ten of the most competitive places in the world for business. Corporation tax is now the lowest of any major western economy; market interest rates are at near record lows; and red tape has been cut by nearly £840 in 2013 only.
Most of the action to boost competitiveness needs to be taken at a national level. And there’s still a huge amount more we all have to do, both in the UK and Romania.
At the start of this century, the Romanian economy was characterised by high growth, low unemployment and declining inflation – a testament to the economic reforms implemented in the wake of the collapse of Communism which in Romania was even more centralising and uncompromising than elsewhere in Eastern Europe.
Romania, like every other European nation, has had to deal with the effects of the global economic turbulence after 2008. The government has earned international credit for its handling of the recession. Austerity measures have been harsh but as a result Romania has one of the lowest budget deficits in Europe and one of the lowest public debts. These efforts, which have involved some difficult decisions, are creating a platform for future economic growth and stability. One that will enable the Government to increase its investment and to attract foreign funds by capitalising on its assets, including: a well trained and educated work force, among whom English is widely spoken; a strategic location offering access to countries of the former Soviet Union, the Balkans & the Middle East; and a domestic market of 20 million consumers, the second largest market in the region after Poland.
But there is still much work to be done in promoting Romania abroad, as lack of understanding and information about Romania in the UK can deter investors, for instance on infrastructure and energy, where Romania has incredible potential. We have been and will remain active in promoting the opportunities this region and specifically Romania present to British investors. Only yesterday we brought to Romania more than fifty British companies interested in investing in energy and infrastructure.
But the Government has to play its part in attracting investors too. This is partly about showcasing what Romania has to offer. It is also about taking concrete measures to ensure a more predictable and transparent business climate, which to be supportive of economic growth and competitiveness. The UK strongly supports the Romanian authorities’ efforts to improve the business climate by combating corruption and increasing transparency in the public sector. Significant steps have already been taken to improve the conditions for business, including new Civil and Civil Procedure Codes, and the National Anti-Corruption Strategy. We have also welcomed the Government’s commitment to increase legal predictability by reducing the number of emergency ordinances. It is also important to engage widely with business stakeholders, and ensure that engagement takes place early, so that business needs are understood from the outset. A comprehensive effort is vital – a strong legal framework is not enough. An effective judicial system, a transparent institutional culture and a lively public dialogue are all essential to tackle the enabling environment for corruption.
We are encouraged by Romania’s progress in taxation. According to the World Bank Report on Competitiveness, the Government has done a good deal to ease the payment of taxes by facilitating online payment with banking cards. Firms are starting to spend less resource on time-consuming paperwork. But there is still much to do in improving fiscal predictability. Firms can be discouraged by frequent unexpected tax changes. And, as someone who has over the past few weeks been inching towards success in the matter of the purchase and registration of a private car I can testify, there is still much to be done in cutting red tape. According to the same report, a firm in Romania still needs on average 255 days to get a construction permit and 223 days to get electricity.
Coming back to my initial statement, most of our actions to boost competitiveness are national. But key measures are required at the EU level as well. We in the UK believe that if we want to maintain our way of life in Europe, and our leading role on innovation and enterprise, we’ve got to get more competitive. And that’s going to require some tough steps to make our labour markets competitive and expand free trade.
In January, the British Foreign Secretary Philip Hammond visited Romania to speak to President Iohannis, Prime Minister Ponta and Foreign Minister Aurescu about reforming the EU to make it more competitive, fairer and more accountable to all of its members.
Across Europe, Governments recognise that reducing the cost of regulation for business is crucial for growth. The OECD suggests that around half of costly regulation in EU member states originates in Brussels, so it is not enough to focus on the national level only.
The European Commission has made some laudable progress; reducing administrative burdens by 25%; micro-exemptions; lighter regimes for SMEs, and its Regulatory Fitness (REFIT) programme, which is aimed at identifying existing burden on businesses. However further action is needed to drive reform actions and improve policy processes.
We in the UK believe more should be done to reduce unnecessary burden on businesses, in particular on SMEs. We believe that the high level competitiveness priorities should be: better regulation; the Single Market in services and digital; and the Transatlantic Trade & Investment Partnership (TTIP).
Tackling bureaucracy requires work at the EU as well as national level. There are tens of billions of euros to be saved by cutting back on unnecessary EU red tape. We have pushed the Commission to go further and faster to streamline regulation. We have a common interest in ensuring that the EU eliminates all the structural barriers that threaten to keep our economies in prolonged stagnation. This is an important area for shared activity between the UK and Romania: it is in our common interest, and will benefit the pockets of our citizens.
Ninety percent of global growth is due to come from outside the EU in coming years, so it is imperative that we expand our trade, using the clout of the world’s biggest marketplace to secure the best deals.
The UK has championed the Transatlantic Trade & Investment Partnership (TTIP) that could be worth £10bn a year to the UK; the EU-Japan deal that could be worth £5bn a year; and the EU-Canada deal that could be worth £1.3bn a year. The EU is also working with China on an investment deal, and the UK is pushing to start talks on trade with China. All of these trade deals will have a substantial positive impact on companies in Romania that seek new markets to expand their business.
The UK is an active promoter of business opportunities and reforms. One occasionally hears the refrain that “Britain lacks a vision for Europe”. This could not be more wrong. We have an exciting vision, an ambitious vision. Of a Europe that is confident in its own abilities and capable of exporting its products and values to the rest of the world. A Europe that is able to deliver on its promise of a brighter future for our children.
In the greatest changes that the EU has experienced over the last 40 years, the UK played a central role. We pushed to create a real Single Market. We pushed for the Eastwards expansion of the EU to countries like Romania, bringing freedom and prosperity to more Europeans than ever before. In the coming years, we will be pushing again for changes to complete the EU Single Market, destroy red tape and free up entrepreneurial initiatives. We hope Romania can be a partner of choice is this area. These developments are very important for Romania too.
Thank you very much!’