The Rt. Hon. Patricia Hewitt

German British Chamber of Commerce

In “Gesprache mit Echermann” (also 1827) he wrote, “Nationalliteratur will jetzt nicht viel sagen, die Epoche der Weltiteratur ist an der Zeit.” or “National literature does not now have much significance, it is time for the era of world literature.”

And I think this could be extended to cultures, economies and societies.

Britain and Germany are stronger for our better understanding of each other, our better knowledge of each other, our closer co-operation together. The sum of our total is greater than the equal of our parts.

Good evening. I’m delighted to be here. Let me congratulate the German-British Chamber of Commerce, who has done an excellent job organising this dinner, as they have done in promoting British/German trade and investment for over thirty years now.

I’m sure you’ll all join me in thanking the Chamber for their past and ongoing efforts. You have played a vital role in strengthening relations between our two countries. Tonight I want to talk about how important this relationship is. And how changes to the world make it more important than ever that we work together, to make

• Britain and Germany strong together;
• And strong within a strong Europe; and
• To make sure that Europe is strong in the world.

For all of us, in Britain and in Germany, our pasts, our presents and our futures are inextricably linked.

We have shared the loss from centuries of European wars and know the future peace of our nations lies in a prosperous and secure European Union. We share the threat of international terrorism and WMDs. And whatever our differences over Iraq, and our relationship is such that we can acknowledge when there are disagreements, we work together to strengthen international security, as we rebuild Iraq.

We share people and cultures, over 110,000 Brits live in Germany; 400 British towns are twinned with German towns; and thousands of students take part in exchange trips every year.

Finally, we share the challenges of the changing global economy. The world is going through a profound transformation. With China in the WTO; India producing a quarter of a million science and IT graduates every year; the EU enlarging to 25 next year, with others queuing to join; North and South American countries joining to make one huge free trade area; and in Asia, Asean. On top of this, technology is both driving and leading change. Product lifecycles, once five years from design to decline, now down to just one or two years. The restructuring in manufacturing now spreading to services, so more competition, more opportunities.

We share these challenges and in response we are coming together. Take the recent Bentley win at Le Mans. A German owned company, a famous British name. Technology from Audi, investment from VW. A British built car, yet British and German engineers and mechanics working side by side in the pit stop. Or GKN, British owned, but with it’s manufacturing and research facilities in Germany.

British technicians and researchers working side by side with their German colleagues to satisfy global customers, linking with German universities and research organisations like the Fraunhofer Institute.

In 1980, Germany invested just over 1 billion euros in Britain, now it’s 65 billion, with 2,000 German subsidiaries here. In Germany, 1,000 British companies are investing almost 20 billion euros. Germany is Britain’s largest export market in Europe. We send British goods and services worth £20 billion to Germany. Britain is Germany’s third largest. And these links will only increase. Research from the chamber shows

• 35% of German companies plan to increase their British operations in the short term
  
  
• The majority of these will increase their operations by between 10 and 40%.
  
  
• German companies will provide up to 8% more jobs for British people over the next three years – so the number of British people working for German companies will rise to more than 250,000.

I am proud of this trend. German companies recognise that Britain is an excellent place to do business because of the economic decisions we in government have taken. In our first term, we gave independence to the Bank of England and reduced public debt, creating the conditions for macroeconomic stability. The results are clear, we are enjoying the lowest inflation for 30 years, the lowest interest rates in 40 years and the highest employment ever. Our economy, unique in the G7, has avoided recession in recent years.

Now in our second term, our challenge is to build on that success so that we don’t just create more jobs, but better jobs by raising the productivity of our economy. That’s why we are investing heavily in world-class science and technology. We are promoting enterprise, innovation and technology transfer, in many cases learning from you. And standing up for fair and open markets in the UK, Europe and the world. So its no wonder we are number one for inward investment projects in Europe. We have a lot to offer potential investors.

But our strength is not a reason to be complacent. Firstly, there is more we can, and must, do to raise the standard of living in our communities. Secondly, our ambition must always be to do better, and to seize new opportunities. If we fail to do this, others will pass us by.

It is essential that we work closely with our European partners to find those opportunities. Both sides gain from this cooperation. Germany, for example, has much to gain from embracing labour market reforms that will encourage more people into work. When Wolfgang Clement was here last month and he described our employment record, our job centres, labour flexibility and non-wage labour costs, as “an inspiration for Europe”. We in turn are watching your experience of euro membership to see if the gains you are experiencing, in terms of currency stability and increased trade, can be pocketed for Britain as well.

Our assessment on the euro showed that if we can make the necessary changes to the economy in the national economic interest, to ensure that the tests of flexibility and convergence are met, then there will be new opportunities for investment, in particular foreign direct investment. That is why, when people say we must not join the euro in any circumstances, I say get a grip on reality and look at what we could gain if we get our economy in the right place to join.

• Increased trade – we estimate up by as much as 50 per cent in 30 years.
  
  
• Lower transaction costs – worth around a billion pounds a year, the gains greater for smaller companies.
  
  
• And a larger economy – by up to a quarter of a per cent larger each year over 30 years - worth up to £3bn a year and rising substantially as the cumulative effects take hold.

According to a survey of members of the German-British Chamber of Commerce 8 in 10 said they would view British participation in the euro within the next 3 to 5 years as beneficial and 1 in 5 said a “no” decision would force them to reconsider their investment plans.

This is important because successful businesses create jobs and prosperity for families, communities and society and provide the wealth to invest in schools, hospitals and public services.

So we face a choice. To do as the Conservatives do and deny the advantages that euro membership could bring for Britain, for our economy, for our prosperity and our place in the world. Stick our heads in the sand and convince ourselves that complacency, and being content to stick with what we’ve got, is the only route or recognise that in the right circumstances joining the euro could be a great opportunity for Britain. An opportunity to increase our prosperity, to boost our share of inward investment further and to win higher standards of living for us all.

This government is ambitious for Britain, committed to facing the future with confidence. When there are opportunities, we should seize them. And that, working together, is what we propose to do.

There is no doubt in my mind that our membership of the European Union has already been hugely beneficial. It has brought peace, prosperity and stability to Europe for 50 years.

With enlargement, we have the opportunity to increase these gains. The bringing together of east and west will put a final nail in the coffin of the bitter years of the cold war, as well as, help increase prosperity. Providing businesses with:

• more customers – over 450 million, larger than America and Japan combined.
  
  
• more trade – previous enlargements to Spain, Sweden and Finland have increased trade by as much as a quarter and we expect a similar boost this time around;
  
  
• more investment - there are already 15,000 British firms trading in the enlargement countries already. In Poland, Tesco now have 48 stores – employing 8,000.

300,000 new jobs will be created across the present EU with enlargement. British GDP will get a £1.75 billion boost. So we’re strongly committed to an enlarged EU. But also a reformed EU and two examples bear this out.

Firstly, on the Convention, Chancellor Gerhard Schroeder and Wolfgang Clement recently set out their vision for a new Europe. We support much of their analysis.

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.

Secondly, on the economic reform programme, we must keep this on track.

Three years ago at Lisbon, a huge shift in thinking took place. We agreed to make Europe’s economy the most dynamic and competitive in the world by 2010. Raising prosperity, creating jobs, promoting social inclusion. With 5 million jobs created across Europe in the last three years, we’ve made good progress but we can’t rest on our laurels.

We must make sure our labour market policy remains focussed on job creation rather than protection. Not protecting those in work at the expense of those out of work.

Both in Britain and in Germany this issue is rightly at the top of our agenda. Today we published our consultation document on Information and Consultation, enshrining our belief that it is outrageous for workers to hear that they’ve lost their jobs when they turn on the radio in the morning or, as we saw recently, by a shocking text message.

We are now giving workers the chance to be informed and consulted on management decisions affecting their future. A European principle but implemented in Britain, as a result of subsidiarity, through partnership at a national level to improve our working environment in a way that doesn’t harm job creation. We need to get the same result through our partnership on the EU Chemicals Directive.

Both Germany and Britain want to ensure our companies thrive in a fast, efficient and workable system that protects the environment without harming innovation or jobs. So we must act and act together to get what we need.

Just as we can make Europe work to our advantage, so Europe must have the political will to be stronger in the world. This isn’t about challenging American supremacy. That would bring a return to the old cold war block mentality or worse a return to 19th Century ideas of spheres of influence, Europe versus America versus China versus Russia versus India and so on. The best answer to unilateralism is partnership.

But, within Europe, with the sum of our total is greater than the equal of our parts, we can be strong and effective partners of the United States. And, in particular, we can lead the debate in the run up to Cancun, less than 50 working days away.

Working to unite the world behind a vision of a peaceful world community with trade systems that are not only free but also fair. If tariffs were halved, developing countries would gain £150 billion p.a., three times what they get in aid. The number of people living poverty would reduce by over 300 million by 2015.

Margaret Beckett secured an excellent outcome last week at the Agriculture Council a couple of weeks a go, by decoupling support from production. I pay tribute to her and Commissioner Fischler for their roles in this. That decision was difficult for a number of countries. But it was a decision that had to be taken and shows that we are a Europe that takes decisions in the interests of its people and it’s long-term prosperity.

Germany has a huge stake in the success of the WTO negotiations. As the world's 2nd largest exporter of goods and 3rd largest exporter of services, Germany stands to benefit significantly from an ambitious agreement, which increases market access for European goods and services around the world. We’re working closely together to drive this forward and will continue to do so.

To close, our two countries, our workers, our companies and our economies are becoming ever closer and closer. Building security, prosperity and opportunity in a changing and uncertain world. I look forward to continuing to work with all of you as we meet the challenges ahead.

Thank you.