Speech

Chief Secretary on investing in the UK

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Chief Secretary to the Treasury, Danny Alexander speaks to US businesses about investing in the UK.

The Rt Hon Danny Alexander

Good morning everyone.

Thank you to Bloomberg for hosting us this morning.

I want to talk to you today about the UK economy – how it is turning around, and why there has never been a better time for you to invest in Britain.

But first, a little bit about myself.

I’m the holder of two very long and very British titles.

The first being that of the UK Member of Parliament for Inverness, Nairn, Badenoch and Strathspey…

And the second being that of the Chief Secretary to Her Majesty’s Treasury.

The first of those titles means that – in the British Parliament – it’s my role to represent the people that live in and around Inverness…

I represent some of Scotland’s most beautiful areas, including Loch Ness.

So I guess you could say I am the elected representative of the Loch Ness Monster!

And the second of those titles means that in the British government – it’s my role to oversee all public spending in the United Kingdom…

While – as Dan said - working closely with our Chancellor, George Osborne…

And our Prime Minister and Deputy Prime Minister – David Cameron and Nick Clegg – on wider economic policy.

This morning I want to talk with you about the current economic situation in the UK…

And the four ways in which – over four years – we have managed to steer it from rescue…

Through recovery…

And into a phase of renewal.

And then I want to give you four reasons for your companies to invest in the UK.

So that you can all contribute to – and benefit from – the growth we’re currently seeing.

I’m sure that everyone in this room…

Will have a firm understanding of the global financial crash.

In the UK, our economy…

Which had – for too long – been allowed to become too dependent on financial services that were not well enough regulated…

Was one of the hardest hit in the world.

In fact – among the G7 – only Japan suffered a worse recession.

Between the first quarter of 2008 and the third quarter of 2009 our economy fell by over 7%.

And the crisis also saw our national deficit increase from £38 billion…

To £157 billion.

The equivalent of 11% of our GDP.

That was the backdrop against which the UK general election and the formation of a coalition government took place.

I’ll be honest with you.

That decision wasn’t popular with everyone.

Some people had got more used to seeing politicians argue with each other than work with each other. And others didn’t accept that firm action was needed.

But we took that decision, because we knew that the UK economy needed a stable government…

That was able to act decisively…

And get the country back on its feet.

Over the four years since…

We’ve followed and stuck very firmly to, a clear – and successful – four part plan to fix our economy.

First, through pursuing fiscal stability – where we will have managed to reduce the deficit we inherited by a half by the end of this financial year.

We have substantially reduced public expenditure, and raised some taxes too, to ensure that the burden of deficit reduction is being shared fairly across British society.

Our debt will start to fall as a share of GDP in 2016, on current forecasts, and the deficit is forecast to be removed completely by 2019.

Second, this tough fiscal policy has provided the space for the independent Bank of England to run an active monetary policy – where a period of quantitative easing has helped to:

  • stimulate demand
  • boost GDP
  • keep interest rates low

Third, through radical reforms to our financial service sector – we have created a system that will:

  • deliver stability
  • increase competitiveness
  • and protect ordinary savers

But we didn’t just face a budget deficit. We faced a competitiveness deficit too.

So fourth – and finally – through a series of supply side reforms we are seeking to raise the long-term growth potential of the UK.

And the upshot of all these changes?

Yes, we’ve had a difficult few years…

And yes, there have been times when the pressure to change course was strong…

But we held our nerve.

And our recovery is well and truly underway.

Inflation is at its lowest level in four and a half years, slightly below the Bank of England’s target.

Employment is at its highest level ever in our country’s history.

And just as our deficit is shrinking…

Our economy is growing – with the recovery balanced across all the main sectors.

No major advanced economy grew faster than the UK over the last year -

We grew faster than Germany, France, Japan, Canada, Italy…

And this year we are forecast to have the fastest growth in the G7.

At last year’s Budget – in March 2013 – independent forecasters predicted our growth this year would be 1.8%.

In December, they revised that up to 2.4%.

At this March’s budget, up again to 2.7%.

That was the biggest upward revision to growth between Budgets for at least 30 years.

And since then, those independent forecasts have continued to climb.

Of course, the challenge we face now, is to make sure this recovery is sustainable, balanced, and long-lasting.

And this – Ladies and Gentlemen – is why we have also sought to make the UK the best place to invest and grow a business.

Business investment is crucial to increasing our productivity and delivering our economic plan.

And what I would say, is that if you’re looking to expand your operations.

Or if you’re looking to set up a new European HQ.

Or a centre for R+D?

Then there has never been a better time to invest in the United Kingdom.

And I’m going to give you four reasons why.

First, if you invest in the UK – as I just mentioned…

You will be investing in a country with a stable economy.

There is growing confidence amongst consumers.

Low inflation rates.

And there is a new economic stability, with a finance system better placed to absorb any future shocks.

Second, if you invest in the UK…

You are investing in a country whose tax system supports business.

We in government have been working very closely with businesses – and business organisations – to make our tax policies simpler, more transparent and better suited to a globalised trading world.

So in the last three years alone we’ve reduced our main rate of corporation tax from 28 per cent to just 21 per cent…

And from next April, the Corporation Tax rate in the UK will fall to just 20 per cent, which is set to be the lowest business tax of any major economy in the world.

Our Corporation Tax rates though, are actually just the beginning.

We’ve also made changes around R+D tax credits and Controlled Foreign Companies and a Patent Box…

Not to mention tax reliefs for film and TV…

And computer games and animation…

And I’ll be more than happy to talk you through any of those in the Q+A…

As will the UK Trade and Investment team who are based at British Consular General in this city.

In fact – that team will be happy for you to get in touch with any queries on anything I’ve covered.

Third, if you invest in the UK…

You’ll know that you’re investing in an economy of the future…

Because our government is prioritising it’s spending on areas that will support businesses over the long term.

So not only are we investing heavily in skills…

Including the creation of over 1.5 million apprenticeships.

We’re allowing businesses to design those skills provisions themselves…

So that the skills our youngsters learn…

Are the skills our industries need.

We’re also – and this is a big passion of mine – investing heavily in our infrastructure.

And I think we learned a lesson – as the world did – from New York here.

After all, this is the city that…

As E.B. White wrote so eloquently…

‘Managed to reach the highest point in the sky…

At the lowest moment of the depression’.

This is the City of Robert Moses, who may not have always been popular but who showed the power of infrastructure to empower people and realise their potential.

In the UK we’ve made sure that…

In these last few years, despite the tough economic times…

We’ve prioritised our spending on roads and railways.

High speed broadband and power generation.

So that our businesses of the future will have the transport and the energy and the digital networks they’ll need to thrive.

We’ve got a huge number of projects underway at present, including:

  • construction of a major new high speed railway, linking south and north of the country
  • biggest investment in our road network since the 1970s
  • major push on superfast broadband, which will see 4G rolled out to 98% of the country by next year

All of which will create a country well connected internally…

And even better connected to the rest of the world.

Which brings us to our fourth – and final – point…

That if you invest in the UK…

You will be investing in an open economy, with access not only to the UK market but to the world’s largest borderless single market - the European Union.

The United Kingdom is route of choice into the European market for countless US and other global investors.

Now – as I’m sure you’re all aware – there are two big debates going on in the UK on that front.

First. From those people that would like to see the United Kingdom leave the European Union.

And second, from those people that would like to see Scotland leave the United Kingdom.

And I’d like to end today by discussing why I think neither of those things should happen.

And why I believe neither of those things will happen.

In Europe it’s true that the recent election showed an anti-EU sentiment from some corners of the European community…

But those results have also triggered – perhaps for the first time – a real fight-back from those of us in favour of the European Union.

Now. I should be clear here.

I don’t believe the European Union is perfect.

But I have always been absolutely clear that rather than talking about the UK leaving the EU.

The UK should be leading the EU…

And ensuring that it works in a better way…

For businesses and for people.

That’s exactly what we’ve been doing.

And we can continue the job by completing the European single market…

By cutting red tape.

And by guaranteeing fairness for those outside the Eurozone.

Of course, we should also all be working hard to secure ambitious trade deals…

Like the Transatlantic Trade and Investment Partnership which is currently on the table between the EU and the US…

And could have a fantastic impact on your exports and our exports.

In fact, an independent report published this month estimated that the partnership could:

  • increase our exports by 2.9 per cent…
  • and yours by a staggering 7.4 per cent.

It also suggested it could add $125 billion to the US economy and create three quarters of a million jobs.

With similarly huge potential benefits to Europe.

So this is a real opportunity for our countries…

And for your businesses…

To benefit from the collective power of the EU.

My position on Scotland is the same as my position on Europe.

Namely that, we should stay together.

As a liberal, I believe fundamentally in taking down barriers between people, not putting them up.

That’s why I support TTIP, and support keeping Scotland in Britain and Britain in Europe.

On the 18th of September this year, we in Scotland will face what is the most important vote of our lifetimes.

And arguably the most important vote in the history of the United Kingdom.

This is – quite rightly – a decision for the people of Scotland to make.

But just because people and companies in the rest of the UK…

And just because people and companies in the US…

Don’t have a vote…

It doesn’t mean they shouldn’t have an opinion or have a voice.

The ties between Scotland and the United States go back hundreds of years.

Scots were among the early explorers and settlers in your continent.

And that’s why people from my Inverness…

Took the city’s name to New Inverness – now Darien – in Georgia…

Not to mention the Invernesses in Illinois and Montana…

And Florida and California.

Of course, later generations have proudly maintained that link, with some 400,000 Americans holidaying in Scotland each year.

And almost 5 million US citizens claiming that their ancestors came from Scotland.

There’s a centre for genealogical research near Inverness if you’re interested in following it up.

Those 5 million US citizens of Scottish heritage may well explain why the US is such a huge market for Scotch Whisky exports…

With £845m – or $1.4 billion – spent on UK whisky last year!

Here in the US, I think you understand more than anywhere else just how well different geographical regions…

That trade together…

And work together…

Can thrive together.

And you also understand just how important free trade within those regions is.

In fact, nobody has ever put the importance of free trade better than Toby Ziegler from The West Wing!…

One of my favourite US exports!

When he said…

You want to know the benefits of free trade?

Food is cheaper. Clothes are cheaper. Steel is cheaper. Cars are cheaper. Phone service is cheaper.

It lowers prices. And It raises income.

But the vote in Scotland this September is about so much more than trade within the United Kingdom…

Or from the United Kingdom.

It’s also about the fact that for over 300 years…

The UK has been a truly great family of nations.

We have a history that has seen British ingenuity and endeavour emerge triumphantly time after time.

And over the centuries, our four nations have worked together – and fought together – to change the world.

So we should face the future with confidence and with optimism.

And – most importantly – we should face the future together.

I mention us fighting as four nations together…

And – as you’ll all know – it was 70 years ago this month…

That Americans were at the side of Scots and Welsh, English and Northern Irish and many other nationalities besides on the beaches of Normandy.

And the 70 years that have passed since have seen huge change across the world.

Politically and culturally and economically…

Mostly for the better.

But just as was the case after that war…

The global financial crash has presented – I believe – another opportunity for the world to look forward…

And build a new – prosperous – future for itself.

I strongly believe that the best way for us to build that future is by closer international co-operation…

And by the identification of common ground to work for the common good.

I believe in open societies, with well-regulated markets, managed by democratic governments cooperating together.

I think that’s what we have in the United Kingdom.

That’s what we have in the European Union.

And that’s what you have in this country here.

So we have common ground.

We have a common language.

And we are both working to build recoveries.

That’s why I want your companies…

To continue to work with our country…

To build both of those.

I want you to come over to the UK to take advantage of our stable economy and our business friendly tax system.

I want you to make use of our skills and our infrastructure and our large open markets.

And I want you to help contribute to – and benefit from – the recovery that we are all building together.

Published 23 June 2014