Good afternoon. Guten tag. Grüß Gott!
I’d like to welcome you to an area of London with stronger links to Germany than you might imagine.
Over two hundred years ago, Pall Mall became the first public street in the world to be artificially lit with gas. And it was a German inventor we have to thank for that.
Frederick Albert Winsor, using old musket barrels for his piping, lit the way to St James’ Palace to celebrate the birthday of George III, who was then King of Great Britain and Ireland, but also King of Hanover.
Even today, the partnership between Germany and the UK, both titans in innovation, research and manufacturing, has remained one of the driving forces behind our continued prosperity.
This partnership matters not just in terms of our bilateral ties, but also because of our two countries’ leading positions within the European Union.
I have been asked here tonight to talk about British voters and how they see the EU, less than two weeks ahead of elections for the new European Parliament.
And it may be of interest to you that underlying sentiment about Europe has been changing in Britain.
Over a series of polls since March this year, more people said they wanted to stay in the European Union than to leave, reversing a pattern that had been in place for over four years.
I think that part of the reason has to be the crisis in Ukraine that jolted us into re-examining the big questions about what our Union is for.
As ten Member States celebrate ten years of EU membership, many have commented on the transformative changes in those countries’ economies. In Poland, for example, trade with the UK has trebled to £5.7 billion a year and incomes within the country have risen three-fold. A country that in 1989 had bare shop shelves and 500% inflation is now the sixth biggest economy in the EU.
For the UK, it was certainly the promise of trade that drew us in to the EEC in 1973.
But it’s about more than trade. When Chancellor Merkel came to London in February, she spoke movingly about her experiences 25 years ago.
Chancellor Merkel said that for her personally, as for millions of people behind the Iron Curtain, the fall of the Berlin Wall in 1989 had been a moment of incredible happiness. And that she had learned first-hand: change – change for the better – was possible.
This “change for the better” is what people still look to the EU to achieve. In the wider world, and right now to Europe’s east, we are aware that it is not just Europe’s prosperity that attracts countries from outside. It is our shared values.
The rule of law. A commitment to democracy. Freedom as a guiding principle. Order. Decency.
These are values that we must protect.
I think this chimes well with the ethos and objectives of the Baden-Baden Entrepreneur Talks. They seek to prepare a future generation of business leaders not merely for their roles in business, but also for their roles in society.
Let me turn now to the situation in Ukraine.
Russia’s actions have cast a chill across the whole of Europe, and recalled a time which we had hoped we would not see again.
The people of Ukraine have lived together as a unified nation for the past 70 years. In a matter of weeks they will go to the polls to decide their future.
We believe it is very important that those elections are able to go ahead without disruption and without interference from outside and we hope that President Putin’s statement yesterday leads to a change of direction from the Russian side.
Up until this point Russia has done its utmost to disrupt this democratic process.
We have seen provocation after provocation aimed at undermining Ukraine’s peace, security, stability, sovereignty, and territorial integrity.
Over the weekend, German OSCE monitors and their colleagues were held by Russia’s proxies in Slovyansk – though, thankfully, they were later released. Journalists were detained and beaten, bodies found in rivers and a BBC journalist had to flee after having a gun put to her head.
It is an enormous shame that it has come to this. The UK, alongside partners in the European Union and across the Atlantic, has expended a great deal of effort over the past twenty years to create what we hoped was a positive working relationship with Russian leaders.
But Russia should be in no doubt that the international will is there to deepen the sanctions that are already hitting their economy hard if that is what we have to do. Some things are more important than pounds, Euros or dollars.
I have been struck by the unity shown by the West in dealing with the crisis. When the values that we share have been confronted, we have taken a long look at our priorities and at who our friends really are. In the long term, this makes us much stronger.
Over the next six months, there are two areas where I suggest we should focus this.
First, we should look very closely at energy security. How can we diminish the dependency of European Union Member States on Russian gas? And, equally, how can we do so while maintaining our strong record on tackling greenhouse emissions, while not burdening citizens in Member States with higher bills?
Second, we should seek to ensure that the European model remains a potent and a powerful force in the world. This means ensuring that we make the necessary reforms to bolster our economic effectiveness.
Our strength in the world relies on the strength of our economies, and we should never take this for granted.
This takes me back to the theme of the talk: what do British voters expect from the European Union?
Well, as businesses, it is always good to focus on the figures.
I mentioned at the start of this talk that in the UK, support for Europe had grown.
According to a YouGov poll, at the end of April, 40% of British people would stay in the EU if they were asked to vote now, as against 37% who would choose to leave. Those figures have been much the same in every YouGov poll since March.
Moreover, the same polls show if you reform Europe – making it more flexible, competitive and democratically accountable, then the number that would vote to stay in rises dramatically.
Under that scenario, British voters by a margin of two to one would want to stay in.
Business associations are even more positive towards the EU.
In September, the Institute of Directors – based in this building – polled its members, and found that six out of ten would want to stay in an EU with improved terms of membership.
So it is incorrect to say “Britain simply wants out”. That’s one myth.
There is a second myth that it is only the British who are dissatisfied with the European status quo.
Eurobarometer recently asked people in all 28 Member States whether they thought their voice counted in the EU.
In 26 out of 28 Member States, including Germany, a majority of people did not think their voice counted. In the UK, the number was 74%. And in nine other Member States, it was even greater.
There are other points of similarity. According to an Open Europe poll, seven out of ten Britons and six out of ten Germans think that national parliaments should be able to block proposed new EU laws.
The third myth is that people in the UK are obsessed with Europe. They’re not. Surveys frequently ask the British population what they think matters to them personally. As of February, Europe wasn’t even on the top ten.
What people do care about is not much of a surprise. The economy. Jobs. Pensions. Tax. Healthcare. Housing. Immigration.
You will notice that many of these issues are within the lead competence of Member States, not Brussels.
The United Kingdom’s position is therefore that the EU should change, and start concentrating on where it can best add value. Implementing policies at a European level which boost competitiveness, reduce regulatory burdens, improve the economy, generate new jobs, and in so doing, put more money into people’s pockets.
So what is the UK doing?
In January last year, the Prime Minister set out his vision for a reformed European Union, looking at what changes would benefit not just the UK but all Member States.
He talked about reforms which would make Europe more competitive, in a world where emerging economies are quickly catching up.
More flexible – getting rid of the old one-size-fits-all mentality and setting policies which take into account the diversity of 28 Member States.
More democratically accountable – recognising that the default answer towards solving the democratic deficit is not “more Europe”, but that a greater role for national parliaments and governments can help.
And what we see is a growing consensus among the Member States that yes, Europe does need to change; and yes, there is sense in the reforms we have proposed.
On competitiveness, the UK and Germany are allies. As Chancellor Merkel said: “The European Union must become stronger, more stable and more competitive than it is today.”
Seven EU leaders, including from the UK and Germany, alongside Commission President Barroso, got together last October to discuss how the EU can get rid of unnecessary regulation that burdens businesses and holds back growth and employment.
On flexibility, British Chancellor Osborne and German Finance Minister Schäuble have set out how the Eurozone can develop a common fiscal and economic policy – with corresponding improved governance, but without disadvantaging non-euro countries.
On democratic accountability, we agreed with the Dutch that where action is taken, it should be “Europe where necessary, national where possible”. Our very strong belief is that decisions should be taken close to the people they affect – as with the German Länder system. We’re not alone. For instance, Dutch Foreign Minister Timmermans has been vocal in articulating his support for national parliaments to have a red card through which they can stop EU legislation where it violates the subsidiarity principle.
We are already making progress. But much more needs to be done.
Though we are seeing tentative economic recovery in Europe, nobody can pretend that we are in great health.
We have a duty to lead the way in shaping the reformed and competitive Europe our citizens – and our businesses need.
The institutional changes taking place this year in Europe – elections in the European Parliament and a new College of Commissioners – give us the opportunity to start making those changes.
If you look at Europe through the eyes of businesspeople, some of the answers are obvious.
You need to keep down the overheads. Last year, the UK and Germany worked with partners to cut the EU’s budget for the first time. We need to be clinical in examining where we can reduce costs yet further.
You need to knock down barriers to growth. Member states stand to gain billions from the Transatlantic Trade and Investment Partnership: in Germany, the Bertelsmann Foundation estimated last year 181,000 new German jobs could be expected, as well as a boost in per-capita income across the EU of 4.68 %. So let’s make it happen.
You need to seek new openings. The digital market is fragmented. Though 60% of EU internet users shop online, last year only 9% of Europeans did so across borders – surely this is an opportunity waiting to be seized. Meanwhile, full implementation of the Services Directive could add 2.6% to EU GDP – more than the GDP of Austria.
You need to tailor yourself to your market. This means having European-level regulation when you need it – not to set the working hours of junior doctors in Baden-Baden, or to stipulate the kind of jug a restaurant can use in Birmingham. Let’s be very clear on when it is suitable for Europe to act, and establish that where it isn’t, it won’t.
And you need to advertise your strengths. From July 2014, the reduced roaming charges for customers using their mobile phone in another EU country will represent savings of 90% on the 2007 prices. That’s a good example of the kind of cost-cutting, growth-enabling policy the EU is good for. So let us concentrate on more of those sorts of policies.
I know that in the United Kingdom, we have a very vocal debate on the European Union.
This is healthy. Recent events in Ukraine have made us all the more aware of our shared values…
… and all the more aware that these are values which need to be protected and strengthened.
The EU reform agenda is more relevant than ever.
And I am confident that Britain, Germany and our European partners will rise to the challenge, work together, and set in motion strategies for growth and prosperity which will benefit the whole of Europe.
Thank you very much.
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