- Foreign & Commonwealth Office and The Rt Hon Hugo Swire
- Part of:
- UK prosperity and security: Asia, Latin America and Africa and New Zealand
- 19 February 2016
- Delivered on:
- (Transcript of the speech, exactly as it was delivered)
Friday 19 February 1200-1330
I am delighted to be here in New Zealand and I am particularly pleased to have this chance to talk to you today about the UK economy and the opportunities that exist for future collaboration between the UK and New Zealand.
Before doing so, I would like to pay tribute to the success of the New Zealand economy. At a time when the rest of the world was beset by the Global Financial Crisis, we watched as the New Zealand economy flourished. We were impressed and jealous in equal measure!
Five years ago, in 2011, the British economy was facing huge challenges.
We were struggling to recover from the financial crash that threatened our economy, and the recession that followed on its heels.
There was talk of a double dip recession.
Our unemployment rate hit a peak of 8.5%. Real wages were falling.
But under the leadership of David Cameron there was a clear long term economic plan for us to follow. We would tackle the crisis in our public finances.
We would cut business taxes and boost enterprise.
We would take the difficult long term steps to ensure a lasting private sector recovery rather than pump up the public sector balance sheet still further and risk catastrophe.
Our British people and British business understood that there was no easy shortcut to the work Britain had to do. Everyone kept their nerve.
And the results have been there for all to see.
Britain has been one of the fastest growing advanced economies in the world these past few years.
Unemployment has fallen to almost 5%.
And now we’ve got the highest employment rate in our history.
Real wages are growing.
The deficit as a share of GDP is down to nearly a third of what it was.
On the back of this, business investment is forecast to grow at 7.4% this year – the fastest growth since before the crisis.
That shows the high level of confidence that exists in the UK economy.
Now I know that that optimism is sometimes tempered, both here and in the UK, by concern about global economic trends – whether it be China’s slowdown, low dairy prices or falling oil prices.
But my message today is one of confidence: we can meet these challenges and overcome them.
There’s a lot of transition taking place – some that is difficult and turbulent, yes; but some that is fundamentally positive too.
We know that China’s economy is in transition, with growth driven increasingly by consumption, services and domestic demand.
We know that global oil markets are in transition, with new suppliers like Iran and new sources like shale.
We know that interest rates in the US are in transition.
And we know there are big forces at work as the demographics of many Western nations change, altering the balance between investment and savings.
In New Zealand – of all places – I hesitate to use the shifting tectonic plates metaphor. But there is no doubt that huge changes are taking place in the global economy.
And the question for all of us here is: do we just talk about this transition – or do we take the action, and show the political will, to adjust to it and make it as smooth as possible?
We need to see every shoulder at the wheel. Every country acting as one in search of growth.
We need China to keep reforming. To deliver on the ambition set out at the Fifth Plenum to allow markets to play a greater role.
We need countries like Russia and Brazil to make greater efforts to diversify, away from state owned companies and to increase investment, particularly in infrastructure.
We need a global commitment to tackle the corruption which stunts global growth. This is why the UK is hosting an Anti-Corruption Summit later this year. We aim to put fighting corruption at the heart of our international institutions. We want to make the rules and practices which govern global commerce even more resilient to threats from corruption.
And in Europe, we don’t want yet another action plan for completing the single market, or yet more calls for free trade deals. We want to see those plans put into effect, which is why the UK has been the strongest and loudest advocate for the proposed EU-New Zealand Free Trade Agreement.
As we face these challenges side by side, I am confident that New Zealand and the UK will remain close trading partners. The UK is New Zealand’s 6th largest trading partner. We are the 6th largest destination for New Zealand exports and the 7th largest source of imports for New Zealand in the year ending September 2015.
Now is a great time to join us and invest in Britain. This is not yet more empty rhetoric. As a government we are investing in hard infrastructure
In Victorian times we led the world in rail infrastructure.
The first inter-city railway in the world was British, the fastest steam locomotive in history was British.
But then we fell back. We are now addressing that, with innovative projects like Crossrail – a smart railway for 21st century London.
We’re also backing the largest road investment programme since the 1970s, building new nuclear power and investing in renewable energy.
We are committed to creating a competitive economy. We know that competition doesn’t always happen if you leave it to the market alone.
That’s why in November we published a new plan to break up monopolies and back new entrants into certain sectors.
We need action to let competition flourish, back the new company that doesn’t always have a seat at the top table and put the customers first.
We are the top destination in Europe for Foreign Direct Investment and the leading FinTech hub in Europe.
These are encouraging signs. Because a digital economy is a productive one
And we will continue to build stronger and deeper links with the rest of the world.
We don’t deliver sustained growth by becoming insular and isolated.
We’ll protect ourselves by reaching out to the world and broadening our links.
By looking to each and every trading opportunity. Particularly with close partners such as New Zealand.
And let me just say a few more words about a trading relationship close to the hearts of both our countries - China.
We want China to rebalance.
As recent events have shown, China is bound to experience bumps along the road to a reformed economy. But we’re in it for the long haul.
We are going to support China on its path to prosperity, along which it has already made such impressive strikes.
Some say that stock market volatility in China means we are wrong to strengthen our economic ties.
But those critics fail to look beyond that day’s headlines.
China is an economic colossus, it is the second biggest economy on the planet. It’s a huge part of our world’s future.
Any economy of that size you would want to trade with, whether it is growing at 7%, 6% or 5%.
At a 7% growth rate, China will add an economy equivalent to the size of Germany’s to world output by the end of this decade.
So we, the British government, are committed to strengthening our links across the world.
A country can only thrive as an outward looking nation that wants to trade with the world if it has a pro-business government.
Under David Cameron’s leadership, I am proud to be part of a government working to achieve that, and in doing so making Britain the best place for New Zealand companies to establish an international presence.
For five years we’ve unashamedly backed business, large and small.
We’ve reformed R&D tax relief – making it more generous.
We’ve dealt with the punitive 50% income tax rate because it was destroying enterprise.
But the biggest business tax reform introduced was made to corporation tax.
In 2010 it stood at 28%, and Britain suffered as a result. In Budget after Budget we have cut the rate, from 28% to 20%. The lowest in the G20. Today, the United Kingdom is recognised as a low tax destination for business.
Overall the business tax cuts we’ve announced since 2010 will be worth nearly £100 billion to business this decade.
That is £100 billion of support for business. In return we expect businesses to pay their fair share of taxes.
You won’t be surprised to discover that there aren’t many votes in cutting taxes for business.
But supporting business in the UK is the right thing to do. Support of this magnitude encourages business to invest, to expand and to compete.
It encourages businesses to build for the future.
To innovate to solve problems, and to respond positively to open and fair competition.
Never has Britain been more open for business, in every sense. The welcome mat is out for more New Zealand businesses, partners, investors and consumers to follow the lead of companies like Rex Bionics, Tri-Max and Orion Health. I look forward to welcoming you to the UK.
Published: 19 February 2016