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Gareth Thomas MP, Former Minister for Trade, Development and Consumer Affairs (jointly with DFID)
Claridges, London , 24 March 2009
Ours is a city like no other – in my view the world’s greatest city.
It is a city that has always been global; in its outlook, and particularly; in its trading interests.
And so your appetite for celebrating and championing London’s international trading links is something I welcome.
I recognise that we meet in what are very difficult economic circumstances to those of more recent dinners.
In the last five months, $ 30 trillion worth of wealth has disappeared globally.
That is more than twice the annual GDP of the United States; and around half the annual GDP of the entire world.
In the past few months, trade and manufacturing have contracted sharply in America, Europe and Asia.
The World Bank stated this week that world trade is on track in 2009 to record its largest decline in 80 years.
Whilst the implications of this global crisis need to be learnt at the international and national level we need to be clear that we will not get through this downturn without understanding, recognising and championing the fundamental importance of keeping trade flowing around the world.
It would be too easy, and would suit those free trade sceptics, to forget it is an open trading system that has helped drive the levels of global prosperity.
Freer, open markets have a proven track record for helping economies to grow.
Indeed globalisation despite all its challenges has been a ladder out of poverty for the developing world.
UN figures show that people living in extreme poverty fell by 400 million between 1990 and 2005.
And there is a huge opportunity in the long-term. The global economy will double in size in the next two decades, driven in particular by India and China.
The opportunities in particular for UK firms to benefit from this growth will be significant – so long as we can keep those markets open.
The Government is absolutely determined to ensure this happens, and we are acting on many fronts to do so.
The Prime Minister has made clear his vision for a global new deal – global solutions for global problems.
A key priority for the G20 London Summit next month is a commitment to keeping the multilateral trading system open and cross-border investment flowing.
We know this is what international business wants.
I suspect it is on your list too.
Last week we met with business leaders from G20 countries around the world.
Their message was very clear:
At a national level the priority for government action has been to do all we can to help companies struggling to secure the finance they need – not because of any failure in their business but due to much tougher credit conditions.
There is evidence for example that lending from foreign banks to UK businesses is slowing.
Estimates suggest that up to £25 billion of lending could be withdrawn in 2009 as foreign banks retreat to their home markets.
Since the start of the year Government has introduced a range of measures to help increase liquidity and ease credit conditions for SMEs.
We established the Asset Protection Scheme, which allows participating banks to insure against losses on assets that have either lost a lot of value or for which there is no market.
In return for this, we have commitments from banks to maintain and increase lending.
Royal Bank of Scotland has committed to increase lending this year by an additional £16 billion for businesses, and Lloyds Banking Group will increase its business lending by an additional £11 billion.
And we are absolutely determined that banks do all they can to raise awareness of the real help available to businesses.
Encouragingly, more than 1,300 eligible loans worth almost £145 million are being processed through the Government’s Enterprise Finance Guarantee scheme.
Since its launch in January, registered lenders are now seeing a ten-fold increase in demand for loans.
We’re determined to work with all 26 lenders signed up to EFG to ensure frontline staff are offering it where appropriate to small companies across the country.
We also know that exporting can be key to survival for many businesses.
A recent survey has shown us that 42% of exporters increased their turnover in the past 12 months, compared with only 23% overall.
The Government has pledged more support for British exporters to help expansion into new markets during the downturn.
Times are tough but opportunities for British businesses to grow their export markets still exist.
I saw this for myself during my visit to South East Asia earlier this year.
The number of opportunities for British companies was immense in sectors as diverse as rail infrastructure or legal services.
Exports to South East Asia were worth £9.2 billion in 2007, and there is huge potential for more growth.
That is why it is vital we give British businesses – through the work of UK Trade & Investment - help to build new networks, open doors and win new business.
We have launched a new programme of support for exports – a Gateway to Global Growth initiative that will support SMEs access foreign markets where they see potential for their business.
This is a new package of support providing specialist and tailored financial and legal advice to over 1,200 businesses in the next year to support their growth internationally.
And we must also be alert to the fact that fiscal stimulus packages and major spending programmes are being announced by governments around the world.
This will create global supply chain opportunities for UK firms. UKTI have therefore set up a team of specialists working to link up our firms with these potential commercial openings.
I know the partnership between UKTI and the London Chamber is growing, helping an increasing number of London companies exploit overseas markets.
A recent joint trade mission to South Africa has delivered good results – opening up the market for example to Harrow accountancy firms Lawrence Grant and helping Croydon packaging designer Compgen win a £1million order.
As a London MP and a Trade Minister I hope this partnership will grow in strength so we can enjoy further success for London companies.
I know many of you in this room will be facing a tough operating environment.
London is one of the world’s leading trading cities and an engine of growth for the UK’s open economy.
We must fight back during this recession by re-doubling our efforts to sell our strengths.
