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The Rt. Hon. Baroness Symons of Vernham DeanBritain in Europe : Partnership Through Trade and Investment |
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CHECK AGAINST DELIVERY Ladies and Gentlemen, it gives me great pleasure to be here today. I welcome this opportunity to address this distinguished audience of German businesspeople, and British businesspeople working in Germany. And it's great to be in Düsseldorf, the capital of North-Rhine Westphalia and one of the hubs of German corporate might. Today, I want to talk about the economies of Germany and the UK, in particular the intimate way these economies are entwined through our trade and investment links. I will underline how much we in Britain value these links, and give you my views on how these links may adapt and develop: not only against the backdrop of globalisation; but, just as importantly, against the backdrop of Britain and Germany as close partners, in the EU, NATO - in Europe. My starting point is that our trade and investment relationship matters. Germany is hugely important to the UK. Continental Europe is our largest export market. And within Europe, Germany is by far our largest trading partner. The UK is an important market for Germany too -the second largest European export market for German goods. Last year trade in goods between our two countries was worth more than fifty billion pounds - more than one hundred and fifty billion Deutschmarks at current exchange rates. And, dare I say it, more than 75 billion Euros! I would like to return to the Euro later. But our relationship is based on more than exports. There are the strong links that come from investment in each other's economies. Over one hundred thousand people in Germany now work for British owned companies. The picture is even more striking in the UK. Over two thousand German companies in Britain, employing some two hundred thousand people. And that investment is still growing. German companies invest more in the UK than anywhere else in the world, with the exception of the United States. That two-way flow is important to both economies. It involves the transfer not just of capital but also of people, ideas and technology. It promotes innovation. It contributes to the growing competitiveness of both our economies, which will be essential if we are to prosper in the rapidly changing world economy. The UK is the prime location in Europe for high-value knowledge driven investment. Household names such as Bosch, Siemens, Thyssen/Krupp, BMW and Volkswagen are all enjoying the benefits of doing business in the UK. Last year a German-British Chamber of Commerce survey of German companies in Britain found that over 70% intended to expand their operations there. That is a tremendous vote of confidence in Britain and its economy. Recent major investments by German companies into the UK include E.ON's nine point six billion pound bid for UK utility company, Powergen. This will be the largest acquisition in E.ON's history. These investments are spread throughout the UK, often in regions not noted for economic success in the recent past. For example, Bertelsmann, one of the largest media and distribution companies in the world, has chosen Liverpool as the home for its European customer service centre. Why did Bertelsmann choose Liverpool? Above all, because the right skills were there. We all know of the difficulties that the Rover-BMW relationship caused for those concerned at the time - but both Rover and BMW have moved on. BMW has continued to re-focus its activities following the divestment of the Rover Group and it is continuing to invest in the UK. It recognises the strength of the UK automotive sector and its reputation for high quality engineering. This February BMW invested 1.2 billion Deutschmarks in Hams Hall, the most advanced engine plant in the world. It will produce 50% of BMW's global 4-cylinder engine requirements. And lovers of automobile history and culture will thrill at the prospect of the new Mini on sale from September: manufactured in Oxford with 1.5 billion Deutschmarks of BMW investment behind it. But our strengths lie not only in domestic vehicles. The UK is the undisputed leader in the design and development of vehicles for motorsport. More than 1000 companies, employing some fifty thousand people in the UK, make Britain the world centre of motorsport. You don't need me to tell you that the present Formula 1 World Champion comes from Germany (although Coulthard can still catch him this year!); but did you know that 20 out of the 24 cars on every Formula 1 grid are produced in Britain? There are many successful UK/German partnerships to be found in motorsport. BMW/Williams is one. The Mercedes McLaren partnership is another. McLaren, located in Woking in Surrey, has been one of the most successful Formula 1 teams since it entered the sport in 1966. Since 1997 the cars have been designed and built by McLaren and the engines supplied by Mercedes. A partnership so successful that Daimler/Chrysler, Mercedes-Benz's parent company, has acquired a 40% stake in the TAG McLaren Group. Daimler/Chrysler and McLaren are now working together on their latest project, the development of a super sportscar - the Mercedes-McLaren SLR - to be designed and built at McLaren's new technology centre in Southern England. This will be the first Mercedes car ever to be built outside of the parent company. Our success in the field of motorsport has been built on the strength of our science base. We have long had a reputation for world class science, engineering and technology; a reputation which continues to blossom on the back of genuine progress and achievement. Britain has just 1% of world's population, but produces 8% of the world's scientific papers. Our record on scientific research is second only to the USA. Indeed a Japanese Ministry for Trade and Industry study once estimated that the UK had been responsible for over half of all significant new inventions since 1945. Successful global companies are recognising the UK as a source of innovation and research. That includes German multinationals. Two years ago Siemens established their major research and development centre at Roke Manor in southern England, creating 150 jobs to work in satellite and digital audio. Last year Siemens invested another 10 million Euros at Roke Manor in research into communications, IT networks and electric sensors. Many of mankind's most important breakthroughs in understanding our world and the universe have been made in Britain. And we see increasing scope to exploit those innovations commercially. We are now second only to the USA in the commercial exploitation of the fast growing biotechnology sector. Germany too is rapidly developing its biotechnology sector with a host of new, small companies developing in the wake of the Biotechnology 2000 and BioRegion programmes. But this is an area where there are clear benefits in international collaboration. There are already examples of German and British companies combining to exploit new opportunities in the biotechnology sector. Merck and Biovation. Evotec Biosystems and Oxford Asymmetry. And there will be many more opportunities for German and British companies to collaborate in this field. If European companies do not work together, the prospects of catching up the lead the USA has are slim. Through close co-operation - real partnership through trade and investment - we have a chance of making Europe the world centre for biotechnology. We are also in Britain at the forefront of those grasping the opportunities offered by the internet- the fastest growing marketplace in the world. Britain has the largest e-commerce market in Europe and we are closing the gap with the USA. Over six billion Deutschmarks worth of goods and services were purchased on line in the UK last year - and it is estimated that eighty per cent of those were business to business transactions. But that is just the tip of the iceberg. By 2003 e-commerce will account for some two thousand four hundred billion Deutschmarks of expenditure worldwide. Tony Blair has set the goal for Britain to be Number One in the world for e-commerce, with universal access to the internet and all Government services available online by 2005. One third are available on-line now. We are creating a new network of 2000 UK online centres, where the public will be able to surf the Net, and get advice. We are providing one million places on on-line IT training courses. We have established a fund to ensure affordable broadband access for business. And we are providing help and assistance to get one million small to medium size businesses trading on line by next year. The potential benefits are vast. E-commerce lies at the heart of our vision for a modern, knowledge-driven economy. Britain is already home to world class IT, electronics and communications sectors. But, in such fast-moving sectors, we cannot afford to be complacent. We live in a global economy where businesses and investment are more and more mobile. Today there is one overriding characteristic of the global economy - the ever-increasing pace of change. Globalisation is of course a word bandied around freely. It's easy sometimes to view it as a hip phrase used by economists and share dealers. But let's bring globalisation closer to home. If North-Rhine Westphalia were an independent country, it would be the UK's eighth largest export market. Home to some of Germany's leading companies, this industrial heartland accounts for almost a quarter of Germany's gross domestic product. But globalisation is having an impact. Many sectors of its industry are undergoing major restructuring. There is no better example of this than in the Ruhr, where an old industrial monolith like Mannesmann transformed itself into a telecoms giant. And then, in a further twist of the global economy, Mannesmann was itself taken over - by Vodafone. I know how much controversy and attention this deal attracted. But it shows what can be achieved. Sixteen years ago Vodafone did not even exist. Today it is the largest company in Europe. The largest mobile telecommunications network company anywhere in the world, with over sixty-five million customers worldwide, interests in twenty-nine countries; and its Europe Headquarters here in Düsseldorf, of course. Restructuring is a familiar tale in many parts of the UK. Areas such as south Wales and the North East of England which relied for many years upon traditional industries such as coal and shipbuilding, have been forced to re-assess where their regional competitive advantage lies. It has often been a painful process. But increasingly, service sector and hi- tech industries have come to replace the old industries, with inward investment playing a key part. Take the transformation of south Wales - now one of the fastest growing regions of Europe. There is not a single coal mine left in Wales: in their place is a very significant cluster of hi-tech companies. And unemployment now lies at 4.5% - the lowest figure for 25 years. As the pace of change continues to increase, so too will the traditional patterns of trade and investment change. Joint ventures, strategic alliances and partnerships will become ever more accepted routes for knowledge sharing and entry to markets, rather than the conventional export and investment routes. We are already seeing that. No country or region can resist the impact of globalisation. What we must do is build the stable economic framework and introduce the economic reforms that will encourage enterprise, enabling our countries, our regions, our citizens to roll with and exploit the changes which globalisation brings. We believe in a Europe of nation states. A superpower, not a superstate. Our vision is of an open European economy, in an open world trading system: one which supports economic modernisation, which promotes business development and the sharing of technologies and best practice. Only by embracing these changes will we achieve the challenging goals agreed at the Lisbon summit last year by all fifteen EU member states - not least of which is to make the EU the world's leading knowledge driven economy by 2010. The major programme of economic reform agreed there will allow us to fully exploit the opportunities offered by the global economy. The Stockholm summit in March of this year confirmed that we have made some progress on the Lisbon agenda. But it showed that there is also much still to be done. To quote just three examples of outstanding Lisbon business: we need to deliver on a Common European Patent, we need to further liberalise our energy markets and we need to create a single market in financial services. By sharpening Europe's competitive edge we will make it stronger. And by making Europe stronger we make each individual Member State stronger. But this is not an end in itself. It has a purpose - to improve the lives of all our citizens by enabling them to share in Europe's economic success. Another of Lisbon's goals was to create a further 20 million jobs for EU citizens by 2010. This is intrinsically linked to economic reform. Only by freeing-up Europe's entrepreneurs and its innovators, by promoting competition will we deliver these jobs for EU citizens and thus help in the fight against social exclusion. Chancellor Gerhard Schroeder has recently set out his vision for a new Europe. So too has Wolfgang Clement, the Minister-President of North-Rhine Westphalia. We support much of the analysis made by both men. We want to close the gap between Brussels and the peoples of Europe. We would welcome the introduction of greater democracy and accountability in Europe. We recognise the benefits of reform of the European Parliament. We remain fully committed to a strong Europe of democratic nations. To enlargement. To working with our partners in the common interest. And to economic success. I said earlier that I would return to the Euro. Why have we not yet joined? Will we ever join? Let me make our position clear. We are not opposed to the Euro. We are in favour of joining a successful single currency, provided the economic conditions are right. We can see the benefits which would flow from being part of a successful single currency - transparency of costs, enhanced trade and currency stability. However, the economic conditions have to be right. Joining must be good for jobs, for investment and for industry. Good for Britain. Not just now but in the future - in ten, twenty, thirty years time. That is why the first step must be for the Government to assess whether five crucial economic tests have been met. If they have then we would join the single currency if that is what the Government, parliament and the people decide. The five economic tests are not a fig leaf for a decision already taken. They are serious, real tests, because joining a single currency is a decision for life. The Prime Minister has promised an assessment of the five tests within two years. Finally, I understand that some sections of the German press have recently described the UK as "the English patient". I hope that my portrait of Britain's hi tech future has already reassured you. Bad news makes much better headlines than good news. An English journalist once said that 'Freedom of the press in Britain means freedom to print such of the proprietor's prejudices as the advertisers don't object to.' I would not go that far but with news we do need to maintain a sense of proportion. Let me give you some other examples to make sure you get a balanced picture. The British economy is in good shape: steady growth, inflation becalmed, interest rates and unemployment low. Indeed Britain has now overtaken France to become, in absolute terms, the fourth largest economy in the world. It is true that our low productivity has been a problem over the last 30 years. Our Chancellor of the Exchequer intends to make this a real priority during our second term. But I should point out the progress we have already made: 8 years ago the gap between British and German per-capita productivity was 30%; now it's less than 10%. Our education system continues to produce world class architects, designers, scientists and engineers. It continues to attract students from all around the world including some 12,000 from Germany. And we welcome them. Our National Health Service has pioneered some of the major breakthroughs in surgery and healthcare. Life expectancy in the UK is equal to that of Germany. Hardly the picture of a third world country portrayed in some quarters. And finally - loud fanfare! Britain is open for business. Let me make this absolutely clear! Our countryside is, with sensible precautions, open to visitors. We welcome you all. To return to the theme of my speech. The economic links between Germany and Britain are growing ever stronger. And so they should. What better example of partnership than the new British Embassy in Berlin. Designed by renowned British architect Michael Wilford: financed, built and managed by German consortium Arteos. And, if I wanted to highlight further the innovation and flair of British design - I guess the words "Norman Foster-Reichstag-Arag Building" would suffice. Our two countries share a long history as trading partners. One of our hosts today is the British Chamber of Commerce in Germany. Looking back through the records of the Chamber, one of my officials discovered that, as long ago as 1913, Britain was Germany's number one export market. And Germany was second only to India as a destination for British goods. Despite the profound economic changes that have taken place since, those ties remain. Whatever the next century may hold, I look forward to British and German business continuing to work together as trade and investment partners in Europe. |
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Other speeches by The Rt. Hon. Baroness Symons of Vernham Dean
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