Transcript of speech given by the Prime Minister at the G20 in South Korea on 11 November 2010.
Thank you. Thank you very much for that introduction and thank you for mentioning my new and larger family. Everyone else has come to Korea for a business meeting or a G20; I’ve come just for a good night’s sleep.
I’m delighted to have the opportunity to close this conference and as I do so I think we should just take a moment to think about the country we’re in and what is says about the possibilities that we can achieve. Because we come to these conferences, we come to these summits, we sign these communiques and we should try and remember that actually, in the life of an economy, anything is possible. I met today with some veterans of the Korean war who hadn’t been here for 50 years and they told me that when they came and they fought to defend this country it was paddy fields and shacks, and now it is one of the most advanced and successful economies anywhere in the world. 50 years ago the GDP per capita of Korea was about the same as the GDP per capita of Zambia. Now it is like 30 times the amount. So the first thing I think we should bear in mind as we come to another one of these meetings is the possibilities if you get economic policy and development and politics right.
The second point I want to make is, I think, how important it is that you’re having this business summit at the same time as the G20 leaders meet, and the reason for that is this. All of the conclusions we come to, all of the work that we do, all of the analysis we come up with is nothing unless it encourages businesses to invest, to grow and to employ people. We want global growth but you are the people who are going to help us achieve global growth, who are going to deliver that global growth, so it is right that we listen to you.
I wanted to just pick out the three things that I think are absolutely essential if we are going to deliver on that agenda. But before I do so, I just want to give a brief commercial for what I’m trying to do with my government in the United Kingdom, because I recognise that in this modern, global world, you’ve got to make your own economy as attractive as possible for business to locate. That’s why in Britain, in spite of dealing with a difficult deficit, we are cutting our rate of corporation tax down to 24% by 2015, one of the lowest rates of any developed country. Thank you.
That is why we’re instituting a policy of deregulation where for every new regulation government introduces, it has to scrap a regulation. That is why we are investing in science rather than cutting science, and that’s why it’s so important that we do everything we can to get out there and win business to come to Britain. I think we have a great story to tell, a great time zone, a great language, great universities, a great industrial base, and now a government that really wants to get behind and back industry and it’s great to see, sitting in the front row, the chairman of one of the most successful banks in the world, HSBC, who at the start of next year is going to be my trade minister, working to attract all of you to come and invest in Britain, Stephen Green.
Let me just deal with the three things that I think matter most at this G20. The first is stability. Business needs to know we are going to have a stable global economy in order to invest, and let me defend for a moment what I think is absolutely necessary for those countries like mine that have large fiscal deficits, we absolutely have to deal with them. You do hear the argument made sometimes, if you have a deficit, put off the action to deal with it because taking money out of the economy will damage your growth rate. I simply don’t accept that. In the case of Britain, with an 11% budget deficit, the most important thing was for us to show we’re going to get on top of that deficit, we’re going to live within our means, we’re going to cut our expenditure over the coming years and we’re going to get rid of our structural budget deficit. The alternative to that is not some wonderland of continuous growth; the alternative to that is the markets questioning your economy, is your interest rates rising, is confidence falling and you see your economy go into the danger zone that others are currently in. So I think it’s vitally important at this G20 that we once again recognise that some countries, those with big deficits, need to act on those deficits. That is not against global growth; that is actually helping to promote global growth and is absolutely vital for the stability that we need.
The second big argument I think we have to get right is the importance of trade. I think one of the main purposes of this G20 should be to show that we are going to fight protectionism in all its forms. We are going to fight trade barriers, we are going to fight beggar-my-neighbour policies, we are going to fight currency wars, we are going to fight competitive devaluations, we are going to show that this world, these politicians, these leaders have learnt the lessons of the 1930s and we’re going to keep our trading system open rather than see it progressively close. And in order to do that I think we have to make and win a big argument, and a big argument not all politicians seem to accept, and that is that trade is good for everybody. Some politicians talk as if trade were a zero-sum game, that one person’s success in exporting is someone else’s failure when they import. This is nonsense. It’s economic nonsense and we need to make that argument really vigorously.
When a Chinese woman leaves the countryside and goes to work and earns $200 a month and is making school uniforms that are sold in France or Germany or Britain for just $20, yes, that woman who is leaving poverty in China is gaining, but that family in Britain that is buying something more cheaply is also gaining. We need to end this idea that export success for one country is a disaster for other countries. Trade is not a zero-sum game and we need to come out very strongly at this summit in favour of trade.
We need to explain that Doha cannot go on being spoken about as something that we might one day achieve; it has got to be something we achieve next year, 2011. It is already almost a decade old and it is an international embarrassment that we have not completed this trade round that could add $170 billion to the world economy. I want to see the strongest possible language in what the G20 comes up with of explaining that we have to make this deal bigger in order to make this deal better, in order to make this deal faster and in order to put it in place in 2011.
While we are at it, we should explain that free trade is good for the poorest parts of our world as well, and one thing the British have been very active in trying to insert into this G20 is a free-trade area for Africa. Africa should be a growing part of the world economy, we should be lifting more people out of poverty in Africa, but we will not do it with all the trade barriers that exist between African countries.
The third thing that we have to get right in my view at this G20 is the big argument about the imbalances in our economy. I think we have to be clear about why this issue matters because sometimes it does sound a bit as if countries are saying to each other that it is somehow a bad thing for one country to be successful in exporting and to have a trade surplus. That is not the issue.
To me, the issue is this: one of the problems that lay behind the 2008 crisis was the fact that we had a wall of saving, a wall of money, in the east and a wall of debt in the west. This imbalance of money, this massive surplus of cash seeking out places to invest, led to all the problems of new bonds and financial instruments being created and the asset bubbles in the west that, when they burst, caused so much damage.
The issue that the leaders have to get to grips with is this: according to the IMF, those imbalances are currently getting worse, not better, so we must not fail to address his issue in the discussions that we have in the next two days. And it is not just about the imbalances; it is also about ensuring that the global growth we achieve in the coming years is as high as it could possibly be. While we have these big imbalances we are undercooking the growth in the world economy.
So I think it is a vital meeting that we are having. I am not saying we are going to solve each and every one of these problems, I am not saying that the G20 is in its heroic phase as it was during the 2008 crisis, but I would challenge those who say that the G20 is losing its relevance. I do not accept that. Just think for a moment about the things that are already fundamentally agreed: a huge reform of the IMF that empowers the rising countries, India and China, with greater voting rights; the implementation of Basel III, essential to make sure we have a safer banking system; huge issues in terms of regulation of significant financial institutions and changes to our regulatory system.
The fact that we have an organisation now, the G20, that includes a wider range of countries crunching through these issues and dealing with them, is good for the stability of the world economy and should be ranked as a success. Clearly, we need to deliver on the issue of global imbalances too, but above all what we should be thinking about as we sit in this dinner tonight and as we sit in that room tomorrow, is answering two simple questions. Is what we are about to agree going to make it easier for businesses to establish themselves, easier for business to employ people, easier for business to invest, to trade, to cross borders?
If the answer to those questions is ‘yes’ we are doing a good job, but there is an even more fundamental question that our publics back at home are going to be asking. Is what we are agreeing going to lead to more people leaving the misery and poverty of unemployment and getting a well-paid job? All the words in all these communiques will not mean anything unless we can demonstrate that people in Britain, people in France, people in Germany, people in India or China, who want to join the world economy and have a job and do better for themselves and their families, if we cannot show that is the result of our deliberations we would have failed you and we would have failed our publics at home.
I am delighted to have this chance to share my thoughts with you about why this G20 matters. Those, I think, are the priorities: stability, trade and dealing with our imbalances. If we get those right and we can strengthen the world economy we can provide more jobs for our people because, ultimately, that is why you are here, that is why I am here, and that is why we are having this discussion today. Thank you.