The Prime Minister discussed the European economy, priorities for the G20 summit and Iran.
Transcript of a press conference given by the Prime Minister folllowing the EU Council in Brussels on 17 June 2010.
Today was my first European Council and a Council rightly focused on our highest shared priority; that is securing the economic recovery. I believe it was a Council that delivered good outcomes for Britain, first on the economy, but also on the vital issue of Iran.
First on the economy, there were clear agreements to tackle our fiscal deficits. The conclusions say, and I quote, that ‘Member States are determined to ensure fiscal sustainability and achieve budgetary targets without delay’. This is an essential step to restoring confidence necessary to underpin the recovery. Many people made this point that confidence is necessary for growth, one statement with which I agree completely.
Also, we agreed the new strategy for economic growth in Europe: Europe 2020. This strategy will focus on jobs, and smart and sustainable inclusive growth by boosting competitiveness, productivity and growth potential. Crucially, I wanted to ensure that this strategy did not interfere with national competencies and it makes very clear in the final text that will be released that it ‘shall not alter Member States’ competencies’. That is important. This document is strongly in Britain’s interest. A stronger European economy will strengthen economic recovery at home, creating jobs and helping to drive British exports.
Also, we received an update from President Van Rompuy on efforts to strengthen Eurozone governance arrangements. As I have said before, it is in our national interest that there is a strong and successful Eurozone and we support efforts to make it more stable and deal with its difficulties. However, we will ensure our red lines are protected, also. We are not and will not be members of the Euro and I secured clear agreement that, first, in relation to sanctions for those who breach their economic obligations, and I quote, ‘due account will be taken of the particular situation of Member States, which are members of the Euro, and of Member States’ obligations under the Treaties’. Again, that has been hardened to say ‘respective obligations under the Treaties will be fully respected’. That is important to safeguard our special position with our opt-out negotiated all those years ago.
Second, in relation to budgetary surveillance, there has been some comment in the press about this. The Council agreed that European cooperation will, and I quote, ‘take account of national budgetary procedures’. I am clear that that means Britain will always present its Budget to Parliament first.
Also, we had a brief discussion on priorities for the G20 summit next week and agreed that the necessary reforms to restore the soundness and stability of the European financial system must be completed urgently. As the Chancellor made clear last night, we will take the steps needed at home to reform our institutions. The Council conclusions very much back the approach that we are taking on a bank levy. This is something we have said we would like international agreement on, but will go ahead in any event with our bank levy. We do not want to have some sort of Europe-determined bank levy with a specific use of the funds and the text talks about, and I quote, ‘introducing systems of levies and taxes’, which actually referred to ensuring fair burden-sharing. That is absolutely the approach that we wanted this to take.
Leaders agreed an unequivocal declaration on Iran. We underlined our deepening concerns about Iran’s nuclear programme and urged Iran to engage in negotiations, and confirmed our readiness to implementing the fresh UN sanctions in Europe, and vitally, to go further through accompanying measures, including through restrictions on trade, banking, transport, and the oil and gas industry. I believe this is evidence of the clear view in Europe that Iran’s pursuit of a nuclear weapon is fundamentally unacceptable. The language on Iran is strong, and rightly so. We want a diplomatic solution. Today, Europe asked Iran to return to the negotiating table and has made clear that the alternative is further isolation and further pain for the Iranian economy.
Finally, on aid, very important that the language talks about European countries meeting and achieving their targets by 2015. There has been no slippage on that and it is important that, even in difficult times when we are having to make tough decisions in our own economies, we should be supporting people in the poorest countries in the world suffering from severe poverty. It is important that we maintain that today.
Those are the points I wanted to make. I am happy to take any questions.
Prime Minister, I presume that, as part of your attack on the deficit, your government had announced cuts today including cuts of a hospital in the northeast and also Sheffield Forgemasters. What do you say to your critics, who are saying that: first of all, that will damage the recovery; secondly, it is an assault on frontline National Health Service; thirdly, it is an assault on the nuclear industry on which you are depending in terms of your carbon reduction goals?
What we said very clearly is it was right to review the decisions very close to the election by the last government. There was a suspicion that, while some of these decisions might have been good decisions, not all of them were good decisions and not all of them were good value for money. Therefore, the Treasury conducted a review. It announced its conclusions this morning. It has carried on with projects that are good and value for money. Those that do not pass that test have had to be stopped.
We are going to have to take difficult decisions. We have a budget deficit of 11% of GDP. I was very struck sitting around that table about the amount of other countries that are having to take impossibly difficult decisions. Our budget deficit is not one of the best in Europe; it is one of the worst in Europe. We are going to have to take difficult decisions and we should start, rightly, with reviewing decisions the last government made when it was close to the election, when it was not always thinking about value for money; it might have been thinking about something else.
Among the issues you are talking about, though, there is a hospital. How is that not frontline? People thought that was the sort of item that might be protected. Have you done any estimates of the number of jobs that might be lost as a result of this announcement?
On today, you are ‘going into the lion’s den’ as a eurosceptic. For years, you have felt and said that you see Europe as almost an obsessively integrationist project with people madly constantly trying to acquire power. Is that what it felt like in the room, or are other people right and that era is over?
Let me answer the first point first. As I said, it is important to review decisions that were taken close to the election to make sure those decisions were good, a proper use of taxpayers’ money and good value for money. It is right the Treasury has held that review and come to the conclusions it has. These are some of the more difficult decisions, but it is right to review decisions in that way and make sure we are always seeing good value for money for what taxpayers are paying.
In terms of what I found in that room, as you put it, there are those in Europe who want to press towards greater integration and who still seek treaty changes and other things to bring that about. However, as you say, you are struck in that room by the fact that, now Europe is so much wider and broader, and you have the countries of eastern and central Europe there, that will help to push us in a more intergovernmental direction, which is what I support. The agenda of the wider Europe, which we have always backed and supported, takes some of the pressure off integration. However, as I said today, you have to be always on your guard. New European documents to help start our economy going, welcome as they are, should not be about surrendering new competencies or giving up powers that should be operated at the nation-state level. We should be sensible and pragmatic about this. We should recognise, for instance, that the Eurozone, people who took the decision to join the Euro - I would never want to join the Euro and never will join the Euro - but people who took that decision, we want that area to be a success.
Fifty percent of our exports go to the EU and 40% go to Eurozone countries; it is not in our interests to have a weak Eurozone. So if it comes to helping them sort out problems in the Eurozone - of course we shouldn’t be committing financially but in terms of helping them to reach the right conclusions - of course we should be doing that. That is in our national interest.
Two questions: firstly, in Congress today, BP chiefs are being grilled by Congressmen and they have been accused of ‘shocking and astonishing complacency.’ Do you agree with that? Secondly, did you enjoy your cooked breakfast, European-style?
Well, I did. I was pleasantly surprised that the Great British breakfast has made its way into the European Commission; I thought perhaps that was just Jose Manuel Barroso trying to make me feel at home but that was a very nice start to the day.
In terms of BP, I have said what I have said; it is up to Congressmen to make their own views known. My view is that what happened is clearly an environmental catastrophe and we need to do everything we can to help with the clean-up and to stand by to help in that way. When it comes to BP itself, this is an important multinational company, it is important to the UK, it is also important, I would argue, to the US. About 40% of its shareholders are UK-based and I think about 39% are US-based. It employs tens of thousands of people in the UK, it employs tens of thousands of people - many more, actually - in the US. It is an important company and I want to see it as a strong and stable company, and I want to see us deal with these problems and issues.
I think the right way to do that is through sensible dialogue and talking about these things, as President Obama and I did in a phone call last Saturday. Clearly BP itself recognises it has got huge obligations and it will have to spend a very large amount of money to cap the leak, to deal with the clean-up, and to pay compensation where it is appropriate; all of those things it wants to do and of course it should do. However, I know what BP also wants is some form of clarity and certainty about the future so that it can be a strong and stable company, and of course, as the British Prime Minister, I would like to see that happen.
You are clearly pleased with the outcome of this summit, but how concerned are you that further decisions on economic governance and treaty change are simply being stored up for the autumn?
And, if I could, one more on this question of the £2 billion-worth of cuts: your Chief Secretary has talked about them as fair and responsible, but isn’t there a danger that they are going to cost jobs and undermine the economic recovery?
Well, first of all, let’s look at the big picture on the economy. The thing that would most undermine jobs and recovery and confidence is not dealing with the deficit. You can look around that table today and you can see countries, all of them, struggling to deal with big debts and big deficits. The truth is that if we don’t deal with our debts and our deficits, we will never have the confidence we need to get the economy growing again and get a strong and sustainable recovery. You can put a blindfold over your eyes and forget that the world isn’t like it is, but it is like that and you have got to deal with these things otherwise you can end up in a very, very serious situation.
The most important thing is getting to grips with the deficit, getting to grips with the debt and showing you have got a plan for living within your means over a period of time. Do that and confidence can return, business will start investing, consumers will feel more confident. I think it is absolutely essential that we do that. It will mean difficult decisions; I haven’t hidden that for one moment, I didn’t hide it before the election, during the election or after the election, I am being very straight and frank with people and it does mean difficult decisions. Danny Alexander and the Treasury team have had to take some difficult decisions today.
As for the future and whether we are storing up difficult decisions for the future, I would just say this: the Eurozone has to sort out its problems and its issues. Now, our bottom line - our red line, if you like - is that I do not support and will not support the transfer of powers from Westminster to Brussels. We are not in the Euro, we are not going to join the Euro, but if the Eurozone countries need to do things to make more sense of their arrangements and strengthen their arrangements, then that may well be the case, but that doesn’t have to involve Britain giving up powers from Westminster to Brussels. That is the absolute key.
Is it in our interests for the Eurozone to sort out their problems and issues? Of course it is; we want a strong Eurozone that is a good customer for British goods and British exports. But I always feel that the decision to stay outside the Euro, which I always supported, was the right one and it does give you additional flexibilities and flexibilities that we should welcome.
After coming here, Prime Minister, is the message you can take back to the eurosceptics in your own party that the European Union can be part of the solution and isn’t part of the problem? Is that the way you see it now?
I think there are things that we can do at the European level that are important and in Britain’s interest. I have always believed that and even my most eurosceptic colleagues would believe and accept that trade with Europe, keeping Europe’s markets open, having a say in what the rules are, these things matter. Of course I strongly believe, [party political content], that where there is political will in Europe to have a strong and unified position over an issue like sanctions on Iran, that is good for the United Kingdom.
Where I am entirely at one with my party is that Europe should be about political will and should not be about endless institution-building and new rules and new processes. It should be about substance, and I found today a healthy degree of consensus about that; we should be about doing things rather than providing new structures to talk about things. That is the sort of European policy that I believe in and I think we have made some good progress today.
Thank you very much indeed. Thank you for coming.