Chairman, My Lord Mayor, Your Excellencies, My Lords, Aldermen, Sheriffs, Ladies and Gentlemen. I am delighted to be here and to share a table with three private sector leaders who’ve made huge contributions to government.
I want to thank Sir Gerry Grimstone for his sage advice as the Lead Non-Executive Board member on the Ministry of Defence board throughout my time as Secretary of State for Defence, Lord Green for his outstanding work as Trade and Investment Minister, and Chris Cummings for his valuable role on the Foreign Office’s own Diplomatic Excellence Panel.
I want to welcome the important contribution of TheCityUK, representing this crucial industry, and working with government to strengthen competitiveness and access new markets around the world.
These private-public sector links are vital and I am delighted this evening to speak to such a distinguished business audience.
Indeed, I like to think of myself as a “private sector” animal at large in the public sector. But I can see that my own career could be said to have taken an interesting turn – from a private sector perspective. I started at the Department for Transport - budget around £12bn. Then I went to the MoD - budget three times that. Now on promotion to the Foreign Office, I’m struggling along with less than two billion, but with a bigger workload than any of the previous departments – Gerry, I have always understood the motivation that caused you all those years ago to jump to the private sector but I am still not quite sure I’ve fully analysed what motivated me to jump the opposite way!
Like everyone in a new job, I started at the Foreign Office with a clear plan and a strategy for delivering it. And that plan then came into contact with reality. Within a few days of me becoming Foreign Secretary, 5 major crises were coming to a head.
On day three, flight MH17 carrying ten British nationals among its 298 passengers and crew was shot down over one of the most politically-loaded conflict zones in the world. Meanwhile, serious hostilities were breaking out in Gaza, a new terrorist movement was sweeping across Iraq in an apparently unstoppable military advance. And all of this was going on as the potentially catastrophic Ebola epidemic took root in West Africa, and the situation in Libya deteriorated to the point that we had to withdraw our Embassy staff to Tunis.
In the space of my first couple of weeks I travelled to Brussels, Tel Aviv, Ramallah, Cairo, Paris and Warsaw. And I think I racked up probably more travel miles shuttling between the FCO and the emergency COBRA meetings in the Cabinet Office.
It was an exceptionally troubled period.
But while turbulence engulfs large parts of the world, Britain is making waves for very different reasons.
Our growth is surging ahead faster than any other major advanced economy.
We have created over two million new jobs, so that we have more people in work than ever before.
Last year exports were up £10.5bn and we’re selling over 80% more to China than we were in 2010.
As I travel the world discussing these various crises and threats, I am praised for Britain’s remarkable recovery, I’m quizzed on how we did it, and applauded for the resolve that the Government – and indeed the people – of the United Kingdom have shown.
Now I’m all too happy to accept the plaudits, but this evening I think it’s only fair to give credit where it’s really due.
None of this would have been possible without the work of businesses like those in this room. You are the engines of growth and the source of our success.
Our approach as a government has been to give you the space and help you need to allow you to power the recovery. That’s why we’ve reduced corporation tax, cut red tape, and maintained investment in infrastructure, despite the squeeze on public finances.
As a government, we know it’s the hard work of British businesses and British people that turn good policy into economic growth.
And as Foreign Secretary, I am particularly grateful because your success is making my work easier.
Because when the British economy grows, our foreign policy muscle grows too.
In the face of Russia’s aggression in Ukraine, our collective economic strength and resilience is a strategic tool and a powerful lever. Sanctions are a genuinely asymmetric option to sidestep Russia’s military provocation - and respond on ground where we have the relative advantage - an advantage of course, fortuitously multiplied by a fall in oil prices that has knocked a sizeable hole in Russia’s state budget.
And conversely in Europe, it’s been those countries whose economies are the weakest who are most cowed by Russian aggression. Weak economies make for weak foreign policy.
This is just one reason why Britain needs European economies to succeed. Too many European countries are mired in low growth. Haunted by the spectre of deflation. Their young people unable to find work.
And the weakness of the Eurozone, as our biggest trading partner, is probably the single biggest factor constraining growth in the UK economy.
So, while a big part of my job is inevitably reactive - dealing with the crises and challenges that the world throws at us, the more strategically important part is executing a long-term plan to keep Britain safe and prosperous.
And I am going if I may, to talk to you about three of the biggest economic challenges of British Foreign Policy: the need for European Reform; the risk that Europe and the US fail to grasp the opportunity to form the world’s largest free trade bloc, and the slow-down in emerging markets, which means we – that means you –will have to work harder to get the same returns.
My priority is to harness the boost that Britain’s economic recovery has given to our international standing together with our world-class diplomatic machine, restored under this government, to help overcome the obstacles and keep us on course for long-term prosperity and security.
First, that means using our leverage to advance the cause of European reform.
Europe’s share of global output is forecast to halve over the next 15 years and we risk being left behind. We are losing relative competitiveness, and some, at least, of that loss is avoidable.
So as Lord Green has said, something needs to change. And thanks to organisations like TheCityUK and businesses around the country, we know what needs to change.
We listened to you in our Balance of Competences review, the biggest consultation of its kind ever undertaken, and we listened to you on the Prime Minister’s Business Task Force.
We agree we need an EU that is more business friendly, more flexible, with less red-tape.
And I started out quite prepared to make a lonely case for change in Europe – it was Margaret Thatcher after all who famously used to say “there’s no harm being in a minority of one – so long as you are right and all the others are wrong.”
But the truth is, this isn’t about Britain versus the rest. It’s about stagnation versus success, for the EU as a whole.
We have a positive case to make, and this government has been making it. I’m just back from my sixth visit to EU capitals “rolling the pitch” for our drive for European reform, and I’m glad to be able to report to you that our messages are being heard.
Ideas that would have sounded peculiarly British just a few years ago, are now being debated in the EU mainstream. There is no dissent about the need for greater competitiveness across the EU. And indeed, we’ve seen some hard progress.
We’ve achieved ten of the Business Task Force’s thirty recommendations for cutting EU red tape; Vice President Timmermans has committed to taking this agenda forward from the top of the new Commission. And European leaders have agreed an ambitious plan for the next five years, with a focus on jobs and growth.
But there is much more to do, if the British people are to be convinced that Britain’s place is in a reformed EU.
To be fit for purpose in the 21st Century, that reformed EU must not only be more competitive; it must work fairly for all its members; it must become more accountable; and it must allow the appropriate flow of appropriate powers back to Member States.
“Fairness” means working for all Member States, whether inside or outside the Eurozone. That means that in a Europe of “ins” and “outs”, the principle of the single market, accessible to all Member States, must be protected. That is non-negotiable.
But the reality of that Europe is also that the distinction between “ins” and “outs” offers scope to accommodate differing appetites for integration, and to recognise the closer integration that Eurozone success will demand, while releasing Britain and other non-Euro countries from the shackles of “Ever Closer Union”.
Alongside fairness between Euro and non-Euro members, the EU must address its democratic deficit. Europe doesn’t feel accountable and its institutions feel remote.
And that feeling that decisions are taken further and further away from people is not unique to the British people – it is a growing phenomenon across the continent.
You only have to look at the turnout for this year’s European Parliamentary elections – in Slovakia a staggering 13% for example – to realise the scale of the disconnect between voters and the EU, right across the continent.
And of course an increasing proportion of the declining number who do vote, are voting for parties which reject the EU altogether.
So, if the EU is to have a future, that, too, has to change.
And one of the key ways to address the challenge of accountability, one that we are arguing for, is for the principle of subsidiarity to be more effectively implemented and for that implementation to be overseen by an enhanced role for national parliaments.
Because the EU is a club of member states; it is to national parliaments that the leaders of those states are accountable and to national parliaments that the electorate look for their democratic voice in Europe.
They are the fundamental source of legitimacy and accountability in the EU Member States.
So a reformed EU must be built on the Dutch principle: “European where necessary; national where possible”, with the EU focusing on the areas where it can really make a difference: completing the single market in services and digital, in capital and energy, and forging new free trade agreements around the world, while letting national governments deal with all areas where European-level interference is not strictly necessary.
But as well as addressing its internal weaknesses, the European Union must lift up its gaze and become more outward looking and open.
Above all, we want it to seize the opportunity of a Trans Atlantic Trade and Investment Partnership between the EU and the United States.
This would be the biggest bilateral free trade agreement ever achieved, accounting for some 46% of global output. It could add almost £100bn annually to Europe’s GDP, £10bn to Britain’s. It would bring huge benefits for the City, for British businesses and for British people.
And we cannot let it be undermined by ill informed scaremongering, or political posturing. TTIP will not threaten the NHS, nor will it lower our food standards, or see governments sued for serving their publics.
On the contrary, this is our opportunity to forge high standards for global trade. And if we don’t do it now at a time when the Euro-Atlantic economy represents 46% of global product, in twenty years time, with our share much lower, we’ll find those standards being set for us by China, India and Brazil. If we miss the opportunity, we will find ourselves standard-takers, not standard-setters.
So the economic arguments are overwhelming. But TTIP would also give us a strategic advantage, helping secure the transatlantic community’s position as the centre of gravity in the global economy and strengthening our ability to deter aggression of the kind we’ve seen in Ukraine through the use of economic muscle.
For all these reasons, the prize is immense. And I’ve seen the appetite there is in Washington and in Europe to bring it about.
But we have to step up our efforts. We need to convince negotiators to make swift progress and we need to explode the myths.
The Government’s determined to make the case. I hope TheCityUK and the other businesses leaders will intensify their efforts to help secure this unprecedented deal.
I just want to say a word about emerging markets because while we push forward with TTIP as our number one trade priority, we have to keep opening up other markets and finding new opportunities around the world.
Growth in some emerging markets may be faltering, but the long term potential is nonetheless immense.
Under this government, we’ve already opened ten new Embassies in the South and the East. We have surged staff into the world’s most dynamic economies. And as Ministers, we’ve been building the political bridges we need to succeed in the changing landscape of the 21st Century.
This is the foundation upon which Britain has become the first Western country to issue renmimbi-denominated bonds, home to the first renmimbi clearing bank outside Asia and the first non-Islamic country to issue a sukuk bond.
In Brazil, we are working with the authorities to internationalise financial markets and make London the international hub for issuance and trading of Brazilian assets.
In Nigeria, we are beginning now to help strengthen the legal framework for capital markets.
And around the world our embassies are working to improve market access and find new opportunities for British business, and to promote the UK as an investment destination.
I’ve told my staff that we may be called the “Foreign Office”, but we need to think of ourselves as the British Office: Relentlessly focussed on promoting British interests and supporting British businesses wherever and whenever we can. And I would urge you to use those resources wherever they are around the world. They are there to serve you.
Working together, we can help Britain succeed in the global race. And we should work with optimism, confidence and ambition because we’re not going from a standing start.
Britain is high in the international league tables.
Our hard-earned recovery is cementing our global influence.
And we have put ourselves in reach of huge opportunities that could secure our growth and our leadership for the years to come.
Seizing them will take hard work and resolve.
But we’ve shown what our country is capable of when we bring together the resources of government and the drive of business.
So let us work together, to build a more prosperous, a stronger and more secure Britain.
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