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Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)Franco-British Chamber of Commerce - Economic Reform in Europe |
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ECONOMIC REFORM IN EUROPE I am delighted to be addressing an audience of both British and French business. There have been strong trading links between our two countries for many centuries now. France is the UK?s third largest export market - worth over £16 billion in 1998 -and our third largest supplier. The United Kingdom is also one of the top 3 investors in France - UK investment in France totals £11 billion - and many French firms have found a home in Britain. Our trade together and with other Member States has undoubtedly been boosted by our membership of the European Single Market. And that trade has been hugely important to both of our countries. But those of us who believe in the importance of Europe and her markets must be the first to recognise that the Europe we have today is not designed to meet the challenges of the global, knowledge driven economy in the 21st century. Governments across Europe now recognise this. Today I?d like to set out how I believe the special European summit in three days time marks a historic opportunity to take forward a new European economic agenda. The knowledge economy is bringing about a fundamental change in Europe. The shift from an industrial to a knowledge-based economy at the beginning of the 21st century is quite as profound as the move from an agricultural to an industrial economy in the 19th century. If we look around the world today there is one main characteristic of the global economy. That is change. Only twenty years ago phone conversations travelled by copper wires which carried less than one page of information per second. Today, a strand of optical fibre as thin as a human hair can transmit in a single second the equivalent of over 90,000 volumes of an encyclopaedia. Information and investment shoots around the globe at the click of a mouse. For most of our history wealth and power has come from the control of physical assets - land, raw materials, coal, iron and steel. In this, the 21st, century it will come from human capital. Knowledge needs to be created, located, adapted and exploited. Applying knowledge to develop new products, new processes and new services which reduce costs, meet customer demands and open new market opportunities. We can only compete successfully against the best in the world if we create an economy based on learning, skills, innovation and enterprise. That makes the fullest use of knowledge and creativity to add real value. Successful economies and societies will be those that can adapt to the demands of rapid change, that are flexible and creative and manage change rather than being submerged by it. That find ways to include all their people. To be honest, Europe is lagging behind its global competitors. We struggle to generate the dynamic approach which has helped to put the US economy on top of the world. It takes twelve weeks to start a business in Europe, against just one week in the US ? and it costs four times as much. It?s not surprising that Europe?s jobless rate at 10% is twice as high. While in the United States the IT revolution has provided millions of new jobs, in Europe there are still far too many people completely excluded from the labour market. The decisions taken last week by BMW in relation to Rover in the United Kingdom show that in a time of globalisation we face two choices ? a choice between uncontrolled change forced by markets and commercial pressures. Or a process of managed economic reform that delivers economic efficiency and social justice in which people and their communities can play a part and be genuine partners in change and not the innocent victims of change. At the start of this century we need to develop a Europe based on knowledge, skills, enterprise and innovation if we are to deliver the growth we all need to tackle the problems of unemployment and social exclusion. The Special Summit on Employment, Economic Reform and Social Cohesion in Lisbon is potentially a decisive moment for Europe. It provides an opportunity to signal a new economic direction for Europe and to embrace a clear programme of reform that combines economic dynamism with social justice. Member States may differ on points of detail, but it seems to me that we all understand that without structural reform Europe will lose out in the global economy. We know that without flexible, strong and open markets, our companies will be unable to improve their competitive position and create new jobs. The Portuguese Presidency has proposed a goal of making the European Union the most dynamic and competitive economic area in the world by 2010. And the agenda the Portuguese have set for Lisbon, focusing on employment, economic reform and social cohesion, gives us the opportunity to steer Europe towards this goal. We must seize that opportunity. I am confident that together we can use the Lisbon summit to set specific objectives that will help to move us towards that goal. We need a new programme for an Entrepreneurial Europe, focussed on making Europe?s environment for business the best in the world and on promoting innovation and social inclusion. We need to look at how we develop and harness the potential of information technology. A key part of that must be getting rid of all barriers to e-commerce and making sure that we have the fastest and cheapest internet access in the world. We need to make sure our education systems can give young people the basic skills which will enable them to be part of a skilled and flexible work force ready for the challenges of the knowledge-driven economy. And we need a world-beating approach to research and development. Concentrating EU funds in areas that require co-operation at the European level, and encouraging the development of high-tech small firms. We should also remember that two out of three European jobs are in small and medium sized companies. These companies are the engines of new job creation across our countries. Too few of Europe?s small businesses grow big. Fast growth firms account for only 4% of firms in Europe - compared to 19% in the United States. We must create a climate which encourages small businesses to grow. A dynamic small business environment that matches the world?s best and recognises that excessive regulation can be a barrier to economic growth and job creation. Of course small firms and bigger companies will only thrive and deliver the growth we all want to see if the conditions in which they operate are right. That must mean giving renewed impetus to the single market programme. The French Government ? with the UK ? played a major role in pushing forward the single market programme of the 1980?s. But key areas remain to be completed, such as telecommunications, intellectual property, energy and financial services. State aids continue to distort competition. We recognise that some of these areas require careful balancing of the consumer as well as the business interest. But I am confident that this can be done. Strong competition and open markets are good for consumers: increasing choice and reducing prices. I hope the French Presidency later this year will take an ambitious approach in setting targets for removing outstanding barriers within the EU. This agenda is not just about the theory of making markets work. Ultimately it?s about jobs. There are 16 million out of work in the EU. In the UK more than 3 million jobs depend on our trade with other members of the European Union. The economic reform package envisaged for the Lisbon summit would create hundreds of thousands more jobs in the UK, here in France, and right across Europe. The Lisbon agenda is about setting the conditions that stimulate business growth and allow thriving companies to take on more people. Alongside this, we need to develop a new social agenda based on employability, inclusion and making work pay. We need to shift the focus of social policies away from regulations which stifle enterprise and prevent the creation of new jobs. That does not mean we are against minimum standards in the workplace: we introduced a national minimum wage for the first time in the UK and we have acted to improve collective and individual employment rights. We need minimum standards to make the new economy work for our people and to make the Single Market work. But we must ensure that our social policies are geared to encouraging enterprise, promoting full employment and creating opportunities for all of our citizens to benefit from a strong, dynamic European economy. The challenge we face is to both embrace the knowledge economy and ensure that in the process we avoid widening the inequalities that already exist in our society. The knowledge economy requires the opportunity rich society - so that all can benefit. That means ensuring everyone has access to the internet ? preventing a ?digital divide? in our society. And investing in education and life-long learning ? to ensure our people have the skills they need for quality jobs in the knowledge economy. Above all else, Europe needs to be more forward looking. Working to an agenda on education, enterprise and innovation. This agenda is one which is shared by Britain and France ? to a greater extent than conventional wisdom might suggest. France has seen the emergence of new venture capital. The French government has relaxed the restrictions which prevented scientists and researchers from exploiting commercially the results of their work. Social security and taxation systems have been simplified to reduce the compliance burden on small firms. The precise measures we take may differ but our objective ? to improve our countries? competitiveness in this new economy ? is the same. We have worked closely with the French Government over the last two years, both to exchange best practice nationally and to establish common objectives at European level in this area. The results have been impressive: We launched last Autumn a joint club of British and French business schools to improve management skills for entrepreneurs; We have worked together to ensure the e commerce Directive could be adopted last December We?ve pooled our thinking on how best to benchmark the knowledge driven economy and we?re now developing that work to help benchmark Europe against the best in the world We?ve jointly analysed barriers to growth and jobs in the service sector and the implications for Government policy Looking ahead to the Lisbon summit I?ve been encouraged by my exchanges at how much of the agenda we agree ? to an extent that I don?t believe would have been possible five or even three years ago. For us as for you economic growth and social justice go hand in hand. This augers well not only for Lisbon but for the longer term economic development of the EU. The Lisbon Summit can mark a turning point in our approach to economic and social policy at the European level. Lisbon presents an opportunity to the Governments of Europe to signal a change for the better in the lives of all European citizens. To tell them that we are working together to make Europe the most dynamic and socially inclusive knowledge-based economy in the world. To boost economic growth levels and deliver more and better jobs and greater social cohesion. To make sure that the knowledge based economy is a bringer of opportunity and not a threat. We must not lose that opportunity. Agreeing such a programme at Lisbon would be good for Britain, good for France and good for Europe. |
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Other speeches by Rt. Hon. Stephen Byers - Former Secretary of State for Trade and Industry (Dec 1998 - Jun 2001)
(the following are available from the archive) |
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