(Transcript of the speech, exactly as it was delivered)
The Foreign Secretary William Hague said:
It is a great pleasure to be here this morning. I am very grateful to the British Chambers of Commerce for all you do to promote UK business overseas, and for your excellent relationship with the Foreign and Commonwealth Office.
Your campaign theme this year is ‘business is good for Britain’. And our Government could not agree more strongly. Business is not only good for Britain, it is part of what makes our country great.
And when British companies succeed, Britain prospers. And it will be the enterprise, the ingenuity and the innovation of companies like yours here today that help to power our country out of difficult economic times.
Now as a Government we are exerting every sinew at home and abroad to create the conditions for that success.
And first and foremost this means, as you know, having the political courage to tackle our country’s problems head-on. That’s the only way to lay the foundations for real growth, not a mirage of growth.
That mirage was the idea that growth can be built on consumption fuelled by debt and on government spending built on debt, and together with problems in our financial sector it dragged our country to the brink.
Sustainable growth will only come from our country expanding its trade with the world, and being a magnet for inward investment from across the globe.
Because as the Prime Minister says, we are in a global race for jobs and for wealth.
We have to make extra efforts to maintain our prosperity, our standards of living, and sources of jobs for the next generation, and that is the Coalition Government’s defining purpose.
The Foreign and Commonwealth is central to this effort. Foreign policy is not something separate to our domestic economic strategy; it is the other side of the same coin:
At home, we have to strengthen the ability of UK business to compete by dealing with debts to safeguard low interest rates, rebalance our economy, cut business taxes and burdensome regulation, reform education so we turn out the brightest graduates and school leavers, reform welfare so it pays to work, and implement a modern industrial strategy to get behind the high growth industries of the future. We have to do all of that at home.
But overseas, we have to equip business to take full advantage of these reforms by connecting them and the British people with the fastest-growing parts of the world: opening new Embassies, striking new relationships beyond our traditional alliances, seeking ambitious Free Trade Agreements that unlock billions of pounds of new commerce. We have to fight protectionism, we have to press for international regulation that is fair and evenly applied, and we have to tackle immense threats to our competitiveness such as those stemming from cyberspace. In all these areas our diplomats and staff are working as hard to support the British economy, they work as hard to do that as they do to defend Britain’s security in a turbulent world.
Getting both things right – our strategy at home and our promotion of Britain overseas – is our national challenge. It is hard, there are no shortcuts. But it’s absolutely necessary.
Today I want to emphasise five areas where this government is equipping and strengthening Britain to succeed in the 21st century: building stability, increasing UK competitiveness, boosting trade and investment, fighting for a global market that is fair and open, and investing in international security, including for business.
First, ensuring stability is a necessary precondition to growth and competing in the global race. That stability comes from international confidence in our country’s ability to pay its way in the world.
We can’t shy away from the scale of the debt problem facing Britain. The unsustainable build up of debt over the last decade meant that total household, corporate and public sector debt had reached five times the size of the entire economy – the biggest increase in recent times of any major economy in the world.
When this Government came into office, Britain was forecast to have the largest budget deficit of any major economy and the highest outside the circumstances of war.
That is why dealing with the deficit is an absolute priority, and in just two years, why we have brought down our deficit by a quarter.
Of course, the scale of the global economic challenges that we face means that the task is more difficult than we thought. But the Moody’s downgrade was a stark reminder that we have to stay the course. By dealing decisively with our debt problem, we will increase overseas confidence in the UK economy and attract greater foreign investment to our shores.
Second, we need to make Britain fit to thrive in a far more competitive international marketplace. To take just one example, Brazil, Russia, India and China now account for 20 per cent of world economic output. That figure has doubled in ten years, and is still rising.
That is why we have cut small business taxes to encourage future entrepreneurs and support existing companies by reducing the burden of taxation. And so instead of sticking with the plan we inherited to put the small profits rate up to 22 per cent, we have cut it to 20 per cent.
We’ve cut the main rate of corporation tax from 28 per cent to 24 per cent, and it is set to fall further to 21 per cent in 2014 – the lowest rate of any major western economy.
We’ve reformed the planning system to favour growth and jobs, not delay and objection.
We’ve increased annual investment in infrastructure, through year on year increases since the June 10 budget to £33 billion pounds, so it is now higher than the Labour plans we inherited.
We have put a billion pounds into a Business Bank for small and mid-sized businesses.
And as Foreign Secretary I see repeatedly in meetings with business communities abroad just how important they are to perceptions of this country as a place to start a business and to invest.
That increased competitiveness is shown in the result of the recent KPMG survey, where in just two years the UK has gone from near the bottom to one of the most competitive corporate tax systems in the world; as well as the World Economic Forum competitiveness rankings, where we are up from 12th to 8th since 2010.
Third, we need to convert this increased competitiveness into actual results by increasing our exports and overseas trade and taking advantage of immense opportunities in new markets.
Of the $20 trillion of growth that the IMF forecasts in the world economy over the next five years, almost $13 trillion will be in emerging markets. And while long term forecasts are often wrong, as we all know, in a generation, China’s middle class is on course to be over three times the size of Western Europe’s, and by 2030, on current trends Central and Latin America’s middle class will be as big as North America’s.
There are huge opportunities for British companies to produce the high-tech and luxury goods that these new consumers want to buy. And it’s the job of this Government to help companies do just that.
One of my first acts as Foreign Secretary was to simplify dramatically the Foreign Office’s list of objectives. Before it had more than the people who worked at the Foreign Office could remember. We now have just three: protecting our security, supporting British nationals overseas and promoting our economy.
By 2015 we will have opened up to 20 new Embassies, consulates and trade offices, and deployed 300 extra staff in more than 20 countries, particularly in Asia, Latin America and parts of Africa, so that Britain is linked up to the world’s fastest growing economies.
And here in London and in all our 250 posts overseas we are focussed relentlessly on supporting jobs and growth alongside all our other responsibilities. I inherited a situation where commercial work was not part of some Embassies’ objectives. Now all Embassies support this work, except in those countries where there are sanctions that prevents such activity.
We have increased training in economics and commercial diplomacy for Foreign Office staff, and are using programme fund investments to build stronger ties with government and societies in emerging markets, so that we strengthen our influence where it really counts.
And we are taking a much more coherent and determined strategic approach to Ministerial visits to help expand Britain’s market share. And 22 visits to China and 21 to India in the last twelve months. The Prime Minister led an enormous trade delegation during his recent visit to India.
This changing culture in the Foreign Office is helping to achieve results for British companies. Our engagement with Brazil on the back-to-back London and Rio Olympics, and their hosting of the 2014 FIFA World Cup, has already helped UK companies to win Olympics and World Cup contracts worth over £100 million; and successful lobbying from Foreign Office Ministers and officials led to Russia lifting – and I was celebrating this yesterday with the Russian Foreign Minister - a 17-year ban on imports of British beef, lamb and mutton.
Our goods exports to the major emerging economies have also doubled since 2009 and, for the first time since the UK joined the Common Market in the 1970s, we now export more goods to countries outside the European Union than to countries inside it. Our bilateral trade with China is set to double to US$100bn by 2015, and is growing faster than our EU competitors, at 40 per cent a year over the past 2 years.
So, we are moving in the right direction on these things, but we have a great deal more to do.
We still lag behind European competitors in the market share of exports to emerging markets. In 2010, for example, Germany had 5 per cent of the Chinese market share compared to our 1 per cent, while for Brazil Germany had 7 per cent and the UK 2 per cent.
And to close this gap, in the last Budget speech the Chancellor announced the launch of a new £1.5 billion export finance facility to support the purchase of British exports, as well as a 25 per cent increase in funding for UK Trade and Investment.
British SMEs are currently less likely to export than their European competitors. Our ambition is to see as many as 100,000 more exporters by the year 2020.
But we know that this will not happen unless SMEs have greater support from government, as well as from business organisations. That is why Lord Green is leading a new Chambers Initiative to increase that support significantly in 20 high growth and emerging markets. A stronger domestic network of business support organisations, matched by an effective overseas network working closely with our Embassies, will offer UK business a genuinely attractive mechanism for increasing export led growth in our economy.
Fourth, we need to work constantly to ensure an open international environment that supports increased and more transparent trade. This starts in Europe, where we are working hard in the EU to complete the single market, address the crisis in competiveness, and conclude ambitious Free Trade Agreements with the US, Japan, Canada and India that will bring billions of pounds and millions of jobs potentially into the European economy.
The Single Market is the core of the EU, but when it remains incomplete in services, energy and digital – the very sectors that are the engines of a modern economy – it is only half the success it could be. So we are pressing for completion of that, as well as urging the EU as a whole to address excessive and unnecessary regulation that holds back innovation.
A comprehensive trade agreement between the EU and the US could boost the European economy by more than £75bn, which is more than any of the other trade deals currently underway. The EU and US account for about half of world GDP, and one third of global trade flows already. We are determined to use our Presidency of the G8 this year and our voice in the EU to secure an ambitious deal that will help break down the remaining trade barriers and bring benefits for businesses on both sides of the Atlantic, as well as boosting growth around the world.
And our diplomatic network will continue to fight other barriers to trade such as corruption, disregard for intellectual property rights, and creeping protectionism, all of which threaten investment. We have to promote a rules-based system so that our companies can compete in foreign markets on an equal basis, and not with one arm tied behind their backs.
That is why we are also using our G8 presidency to fight for freer trade, fairer taxes and greater transparency. We want the G8 to accelerate progress on fighting the evasion and aggressive avoidance of taxes that deprives governments of the revenue they need to provide public services, to ensure the rule of law, and stimulate investment and private sector growth. We also want the G8 to agree to ambitious new transparency standards for business, so that all companies play by the same rules.
Fifth and finally, we are investing in international security to help combat threats to security which undermine trade and commerce, including terrorism, piracy and conflict. To take just one important example, only two years ago Somalia appeared locked in a downward spiral of violence and lawlessness, but last year we brought fifty countries together to secure new action on piracy and persuade that country’s political leaders to make progress on the ground. As a result, the number of ship hijackings off the coast of Somalia has halved in the last year, and a second Somalia Conference will be held later this year so that we can ensure that progress continues. Our diplomatic efforts to support a politically open and economically prospering Middle East and North Africa, to head off threats to security – particularly business security - in cyberspace, and to combat terrorism from Asia to the Sahel, all underpin a more secure environment for business and trade.
So we are tackling our problems at home and using foreign policy to seek out new economic opportunity for our country.
We have all the attributes for success as a nation. The openness, the inventiveness and the daring that is hardwired into us in Britain helps to explain why we are still the sixth largest economy in the world when we only make up 1 per cent of its population.
And as Lord Green often reminds the Government, we export cheese to France, sushi to Japan, caviar to Russia, sand to Saudi Arabia and potato chips to America. Now this requires enormous ingenuity on behalf of British businesses involved.
It will be talented and hardworking British people and companies who propel our country towards a prosperous future, and our government – as you can gather from what I have briefly described - will give them every support and assistance. We welcome your ideas: challenge us, criticise us and tell us how we can do more.