"Foreign policy has to support jobs and growth, and prosperity"
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Foreign Secretary William Hague spoke at the annual Confederation of British Industry (CBI) dinner on 16 May.
As Foreign Secretary and a member of the Cabinet I see every week how the domestic economic scene and the international scene come together:
How it is crucially important that investors overseas have confidence in Britain as a place to base their business.
How it is vital that we have Embassies around the world that are able to champion Britain and help create a stable and open international environment in which our country can thrive.
This is why foreign policy has to support jobs and growth, and prosperity.
Some people have sneered at this. They fail to grasp that we have to help enterprising people create the wealth that drives the investment in our schools, our hospitals, our roads and that pays for our overseas development programmes.
Of course our foreign policy has to achieve other things too.
Support for human rights is in our core national interest and deep in our DNA as a nation. But our ability to promote freedom and democracy is strengthened by a strong economy and a global role.
Foreign policy is not something that exists in a vacuum.
It is not window-dressing for our nation overseas.
It is not the plaything or pastime of Ministers, to be channelled into utopian schemes to remake the world.
And it is not merely a rapid-reaction capability, putting out fires when crises erupt around the world.
It must be - and with this Government it is- a coherent plan for how we secure our country’s long term-interests in a more competitive and unpredictable world.
We face formidable challenges in foreign affairs from nuclear proliferation to climate change to international terrorism, and we fight these dangers every day.
But the greatest single danger to our country today is economic in nature.
I led one side of the negotiations that produced the coalition government.
The atmosphere was urgent. We knew that our country needed a stable government able to make tough calls at a time of unprecedented economic risk.
Two years on, we have taken many of those difficult decisions.
When we came to office the deficit stood at 11% of GDP; it is now forecast to fall to 7.6% next year.
This has delivered lower borrowing costs for government, households and businesses. Sterling gilt rates are at their lowest since the year 1703.
Our economy is now seen as a safe haven in Europe, and we have begun domestic reforms to create the conditions for growth and competitiveness.
But the sense of urgency and purpose has to be with us still:
We are still grappling with the effects of the worst economic crisis to hit our country and the world in living memory.
The economic recovery has been slower and more uneven than expected, including in Britain;Global growth has been weaker than predicted, and there is still instability in the global financial system;
The Eurozone is facing profound challenges - many of which were obvious from the beginning - but which are now exacerbated by weak growth and excessive debt;
Commodity price shocks are leading to rising costs and dampening recovery;
And we are starting to see creeping fingers of protectionism in parts of the world - picking at the edges of the free and open markets on which the international economy depends.
This is what we are up against as a country.
No single event would provide a bigger boost to the British economy in the short term than the resolution of the Eurozone crisis and a return to growth in Europe.
And the crucial ingredients of achieving that growth are fewer barriers to business, more free trade, less intrusive regulation and the understanding that governments have never and will never create wealth solely through their own activities.
But we will not put Britain back on the path to prosperity unless we deal with our own economy’s deep underlying problems.
This is the driving purpose of our Government.
We have to re-balance our economy and deal with the legacy of national debt on a colossal scale.
We have to boost economic confidence and attract investment, break into new markets and reduce our trade deficit.
We have to rise to the challenge of earning our living in the world, where indeed many British businesses are leading the way.
We have to recognise that our graduates are now competing in a global market place against well-schooled, ambitious and dynamic young people in burgeoning new markets around the world.
It is radically different from the environment when most of us left university and entered the world of work.
We have to win our place in this world economy and - I argue - to set out to want success more than some of our competitors, and as I wrote in the Time this morning that is directed at every Minister, civil servant, entrepreneur, shopkeeper, trader, investor and student.The challenge for all countries is to adapt and thrive or fail to change and fall behind.Some nations will succeed in doing this; others may not.
Our Government is determined that our country will be one that does succeed.
That is why we are reducing the deficit and bringing public finances under control; creating a tax system that fosters growth and is attractive to business; reducing corporation tax to among the lowest in the G20 and lifting two million people out of income tax altogether; introducing a welfare system that encourages people into work and an education system that gives people the skills they need to succeed.
By doing these things, we are turning around the fortunes of our economy for the long term.
And it is my firm belief that in the 2020s these reforms, particularly in education and in welfare, will be seen as having been as important to our country as the Trade Union reforms and privatisations of the 1980s.
My objective in leading the Foreign and Commonwealth Office is to ensure that when these domestic reforms take effect and the benefits are seen, the British people will also find that we have developed vital new networks and connections overseas so that they can make the most of the opportunities open to them.
On top of preventing conflict, promoting our values and dealing with crises, this is a vital role of the Foreign Office.
It must support open and fair markets, resist protectionism, battle bribery and corruption and take the lead in protecting the intellectual property on which much of our trade advantage is based. Our diplomats have to help create new openings for UK business overseas and for inward investment, and in the EU champion growth, business-friendly regulation, the expansion of the Single Market and the Free Trade Agreements that bring billions of pounds worth of business into our economy.
All of us know that sustainable growth in our economy is not going to come from Government spending fuelled by debt, or in current circumstances from domestic demand.
It is going to come from investment and from boosting the share of our economy that comes from exports.
Our economic achievements have always been built on our prowess as a trading nation. The openness, inventiveness and daring hardwired into our national DNA helps explain why it is that we are still the seventh largest economy and the sixth largest trading nation in the world when we only make up one percent of its population.
We are export around 30% of our GDP.
We have immense advantages of language, history and geography, and British ideas and technologies are changing the world:
In Manchester, Nobel-prize winning scientists are developing graphene, the new wonder material that is one carbon atom thick.
In Cambridge, ARM are designing the technology that goes into 90% of all smart phones. And in London, scientists from UCL and Imperial College are researching ways to use nanotechnology to tackle cancer or to generate cheap solar energy.
It is achievements like these that undoubtedly will fuel our future success.
But we have to be even better at deploying them in the future than we have been in recent years.
We have actually lost global export market share over the last decade, and fallen behind our European competitors in emerging economies.
Our trade with Brazil - a country of almost 200 million people - is half our trade with Denmark; and the number of SMEs exporting in this country is below the European average.
Today, the vast majority of our exports head to markets which will remain vitally important to us, but where growth is currently sluggish:
70% of all our exports go to North America, the EU, Japan and Switzerland, and less than 10% are destined for the ten largest emerging economies.
Now, long-term economic predictions are often wrong in their detail, but on current trends emerging markets and developing countries will account for about 60% of global GDP by the middle of the next decade. And in the first half of this century the BRICS, already larger than the Eurozone, could overtake the G7.
So we have to tap into new markets as well as retaining our strong position in the old - particularly in the vital markets of the United States and the European Union.
This is a challenge that we can embrace with enthusiasm. Over the next fifteen years, the world economy is projected to double from $60 trillion to $120 trillion. That is $60 trillion of new prosperity within a generation - and of course we want millions of British people to share in it.
So the first task of the Foreign and Commonwealth Office - when it comes to supporting our economy - is to build the relationships that help British business expand market share in the fastest-growing economies.
The Chancellor has set the ambition of doubling UK exports to £1 trillion a year by 2020; and the Prime Minister has called for us to help get another 100,000 companies exporting by 2020.
If we can increase the number of firms exporting by 100,000, we can generate an extra £30 billion a yaer for the UK economy.
Lord Green in his capacity as Trade Minister is bringing energy and determination to this task, working closely with the CBI. We hope to see more initiatives like the joint Government-CBI trade mission to Turkey last month that he led with John Cridland, the first of its kind for mid-sized businesses.
And in the Foreign and Commonwealth Office we have a much sharper commercial focus, a reinforced economics unit, more staff seconded to business, a Charter for Business, and a leaner and more focused set of objectives.
The Foreign Office I inherited had ten objectives. Anyone in business knows that it is impossible for a workforce to be effective if there are more objectives than anyone is likely to be able to remember.
So now we have three objectives: safeguarding Britain’s national security, supporting British nationals overseas and building our country’s prosperity.
To achieve that building of prosperity we have defined our responsibilities as creating the conditions and opportunities for UK growth, securing more trade investment and jobs for the UK, and tackling global economic challenges including low carbon growth. And our Embassies have a mandate to help British companies win contracts, promote British sectoral strengths and to understand and influence economic, financial and political conditions in other countries. They do this alongside their vital work of supporting global security.
A G20-plus world is harder to navigate than a G8 world. Companies seeking to export for the first time or to break into new markets face obstacles - whether it is language, unfamiliar legal systems and local laws or political risk and uncertainty. We want to do even more to help companies overcome that.
I am pleased that many people in business are now reporting a cultural shift in the Foreign Office towards the more effective promotion of the British economy:
Last year the FCO and UKTI helped over 20,000 small and medium-sized enterprises to break into markets around the world.
British exports of goods and services were up by £50bn - a double digit rise of 11% - including significant increases to Brazil, Russia and South Africa, and to China and India, which for the first time featured in our top dozen export destinations.
The first Renminbi bond issued outside China was issued in London, by a British bank. We signed a UK-US Defence Trade Cooperation Treaty that will make it easier for British firms to bid for US military contracts.
Our Consulates in Houston and Denver helped prevent protectionist Buy American legislation. Our Embassy and UKTI team in Riyadh helped Invensys secure a £420m contract for rail signalling technology to help transport pilgrims between Mecca and Medina.
And UKTI helped W.S. Atkins to use its Olympics cachet to win business overseas in countries such as Qatar, host of the 2022 FIFA World Cup.
So across the globe we are working to support you.
The CBI’s President Sir Roger Carr addressed all our Ambassadors recently. He told us CBI members want greater assistance from our Embassies, in making contacts, deploying local knowledge, providing better coordination and follow-up around Ministerial business delegations.
We have heard these messages and we will strive to improve our performance in all these areas. We need you to tell the Foreign Office where you encounter difficulties; and to contact us and let us know what more we can do to support you. And we need even closer cooperation and understanding between us, on trends in the world and opportunities for prosperity.
But from the beginning of the new Government, we have embarked on expanding our diplomatic network so British diplomacy is present in more places with greater force and effectiveness.
Our Embassies are the essential infrastructure of our recovery overseas.
So we are reversing the steady shrinking of Britain’s diplomatic footprint under the last Government.
By 2015 we will have deployed 300 extra staff to fast growing cities and regions in more than twenty countries, and we will have opened up to eleven new British Embassies and eight new Consulates or Trade Offices.
For example, soon Britain will be one of only three countries in the EU to be represented in all the countries of ASEAN - with its new single market of 600 million people.
We have already opened two new consulates in Canada and Brazil. And my announcement yesterday of two new Deputy High Commissions in India mean that we will have more posts in India than any other Diplomatic Service in the world.
And our Ministers are relentless in promoting Britain overseas.
We are passionate about helping to create jobs and growth, and have already made more than 400 separate visits to 127 countries - including many which have not seen a British Minister in many years - honing in on opportunities for Britain as well as vital foreign policy issues.
As I travel around the world I am really proud of what we make and do in Britain.
We produce high value goods and services in every sector in every part of this country.
We have the biggest industries in Europe for the life sciences, ICT, defence, security and the financial services.
The BBC’s natural history programmes are watched in 200 countries and territories and Doctor Who was the most downloaded show on iTunes in the US last year.
We live in a country which, after centuries of buying fine wines and cognac from France, is now exporting to the French five bottles of Scotch whisky per second.
And as someone who worked with JCB, I also know that we have got some of the best engineering and manufacturing skills on earth.
Well over a million cars a year are built in plants here in Britain - 70% of them for export around the world - and about half our country’s exports are manufactured goods.
We have to do everything we can to make sure British people at home and abroad are aware of these things, and to champion them ourselves.
We also have to protect our competitive advantage, and so we are bringing forward guidance for business on how together we make the UK’s networks more resilient against cyber threats.
So we have a Government working to ensure we have the most competitive tax system, the best education system, a revamped welfare system and the most attractive environment to invest and start a business.
We have a Foreign Office building the connections to the fast-growing economies of the world that will be indispensable to our future.
We have Ministers who lobby for British business on each and every visit overseas. We have the skilled diplomats on the ground able to interpret events, spot opportunities, make connections and help you to develop lasting relations.
We have the determination to use our voice internationally to argue relentlessly for free Trade and open markets and against protectionism or regulation that harms the British economy.
With all this in place to support British companies small and large, we now have to make the most of it, so that British products are known by people in Brazil as well as Belgium; India as well as Ireland; and South East Asia as well as Western Europe.
And we have to build on the spirit of adventure, determination and invention our country has always possessed; on which our success has been founded for so long, and without which no nation can succeed in the decades to come.
As you do these things British Ministers and diplomats will be urging you on, backing you up, opening your way and fighting your corner.
In his speech to the Foreign Office Sir Roger put it very well. He said “there is no doubt: for business to be successful in an increasingly competitive world, it needs more courage, more effort - and more support than ever before”.
The good news is that you have a Government that is determined to give you that support, and we look forward to working with you to bring the further success and prosperity that is within the reach of our country, our businesses, and our people.