TRANSCRIPT

Confederation of British Industry annual conference

Monday 23rd November 2009

Gordon Brown

The Prime Minister, Gordon Brown, today (November 23) spoke at the Confederation of British Industry annual conference, where he set out plans for investment and export-led growth in the UK. The role of renewable energy was part of his message to British businesses.

Let me first of all congratulate you, Helen, on being appointed as president of the CBI.

The breadth of experience and expertise you bring to the presidency is already
making a great contribution to answering the challenges which British industry faces today.

And we should take pause to congratulate you also as the first woman in the 44 year history of the CBI to be appointed president. And let me thank Richard Lambert whose strong leadership makes a huge contribution to British business success but also to the reputation of Britain round the world.

What I want to talk to you about today is growth; Britain's growth in the new global economy.

I want to set out the best way forward: investment led, export led growth - delivering high value products and services into global markets.

And, indeed, it is important that this can be our theme today: lifting our eyes to what our future priorities must be.

It's been a very tough year.

These have been the most testing of times for British business - and for businesses right across the world.

In less than a year in the United States alone over 120 banks have failed.

Banks are expected to record almost 3 trillion dollars in losses.

With the collapse in available money, global trade fell in one quarter of this year by almost 20 percent. And this year global trade is forecast to have its sharpest fall since the 1930s --- down 12 percent in a year.

In the second quarter of this year exports from China, Korea Japan, Germany and Italy were all down by nearly 20 percent.

Investment flows to the emerging markets have fallen from over 600 billion a year to being negative.

And the best estimate for the year 2009 is of 38 million jobs lost worldwide.
So the global financial crisis led to a global trade crisis, and then a global
industry and global jobs crisis.

And in the midst of these difficult times, I believe we have seen the true character of British business. Since we last met here - a year ago - you have had to show great resilience, great enterprise, great determination.

In the 1930s JM Keynes said we can either fail conventionally or succeed
unconventionally. When we met here a year ago - in the face of extraordinary times -I said we were 'leaving behind the orthodoxies of yesterday'.

And so with the whole global banking system in danger of collapse, we had a choice: to stand aside or to undertake a wholesale recapitalisation of the banks. We chose to restructure the banks. Thank you for your support in that.

The Bank of England - with our support - had a choice; whether to rest on traditional monetary action or to establish an unorthodox programme of quantitative easing. You supported quantitative easing too. Thank you.

And we had a choice; to let the recession simply take its course - or to match
monetary action with a fiscal stimulus. You supported us in initiating, through the new G20, co-ordinated fiscal action - in fact, 5 trillions of stimulus - across the world.

Having already taken this unprecedented global action, there is another choice: the timing of withdrawal from that fiscal stimulus - and you agree with the G20, the European Union, the IMF, the OECD arid every major economy and every respected economic body that we should be careful not to abandon the stimulus too rapidly. Choking off recovery by turning off the life support prematurely would be fatal to world growth. And it would be fatal to British jobs, British prosperity, and British growth and to our capacity to grow not just for now but for years.

So that's why we will, like other countries, continue with our plans to support our economy until the private sector recovery is established, and we will ensure that nothing we do will jeopardise that recovery.

And now as we focus on coming out of recession we recognise that - not just Britain, but across the whole world we are looking at new realities.

First, it's clear that international economic cooperation is not now a luxury but a necessity. Put it one way: 1.5 trillions of American consumer spending a year has been taken out of the world economy threatening growth for years to come. If we are to have balanced and sustainable growth that will keep unemployment low we will have to address together, and my chosen vehicle is the G20, a strategy for global growth: addressing global imbalances in trade, the inefficient use of reserves, the instability in oil prices and agree together the contribution to higher growth each continent can make.

Second, in countries like ours, public and private sector: business and government - can no longer engage in a sterile battle for territory with each other: as increasingly is being proposed in America, in France, Germany, China and India, public and private sectors have to work together for the national interest and in particular to promote the common purpose of growth. And more so now than ever before, we cannot hold on to old dogmas and walk away from co-operation in Europe and beyond, and from creating an effective partnership between government and business.

And third, we have learned that the reality is that global financial markets can selfdestruct, without being able to self-correct. And we must sure that banks maintain their duties of stewardship, do not overcharge their customers and are held to account when they do so.

Not just in Britain - but internationally - we need to rebuild trust between banks and the societies they serve. But whether it be protection against failure, or changing the balance of risk and reward between the financial sector and the public, and whether it be the protection of the public through contingent capital or resolution arrangements or insurance or a global financial levy, the only action that will work is global action: action taken together by all the major economies.

But we must not, in the name of clearing up the mistakes made by some banks, do anything other than support and encourage the hard working entrepreneurial and responsible many. The agreements we put in place with RBS and Lloyds, in return for our support, will mean £27bn of new lending for businesses this year and next. Other banks soon followed this commitment to lend - so that, despite well known problems for small business and high technology companies, gross lending is now up and access to finance is improving. And we will always do whatever it takes to make sure creditworthy businesses can get the finance they need to invest, expand and grow.

And this last year has brought home to people all over the country the reality that Britain has to be competitive in the global economy. The global financial crisis is itself but one of the big changes that reflect the speed scope and scale of globalisation. To highlight the changes that are happening, we are publishing, a series of case studies of cities around the country (the first of which are available at this conference) called 'futurestory', which illustrate how globalisation is changing the cities we live in, the jobs we do and the industries we are building - and how we are showing dynamism and initiative in responding. It shows how real people and real businesses are stepping up to be successful in the new global economy - and should give us confidence that, already we can see in our country - and in this room today - the building blocks which will make a success of our own future story.

The inevitable consequence of the events of the last year - and the extraordinary action we have had to take - has been rising fiscal deficits and debt: not just in Britain - but in every major economy in the world.

We are one of the first governments in the world to announce a time specific deficit reduction plan - including measures we have set out in detail on taxation and spending - that will, over four years, cut the deficit in half.

And our fiscal responsibility bill will enshrine this commitment in legislation.

Of course the vast majority of the increased public borrowing has been caused by a lack of growth. And the most important driver of deficit reduction over the period ahead will be the growth performance of the economy and the speed with which we can get unemployment down. So our strategy for growth is not at the expense of necessary deficit reduction - it is absolutely central to that objective. So as we take measures to halve the deficit over the next four years we will continue to make the investments in growth and skills that I know everyone here would expect this probusiness pro-enterprise government to make.

You know in your own businesses what it takes to create worldwide operations; how important it is to take the opportunities offered by the new digital technologies; to develop infrastructure and governance that works across the world; to reduce deficits through a focus on growth and to attract investment.

Just as these are the priorities for businesses, so they are for Alistair Darling and Peter Mandelson and his business team so the plans I am laying out today are to back up and unleash the entrepreneurial, innovative and dynamic talents of British business leaders and employees, and to enable us as a nation to keep corporation and capital gains tax low and meet these global challenges.

First, our commitment to build the first modern digital infrastructure with the Digital Economy Bill and our incentives to stimulate private sector investment, Britain will by 2012 lead the world in fast broadband services. And we are already working with Sir Tim Berners-Lee and Martha Lane Fox so that Britain can lead the next stage of the online revolution: through digital access to create new business opportunities and new jobs - and to revolutionise the way government services works and cut their costs.

Second, our commitment to prepare for, and meet, our future energy needs with a shift to low carbon. To lead the world we have to invest now in renewables in carbon capture and storage, and in new nuclear power stations. And we will now build not 12 gigawatts of nuclear capacity but 16 gigawatts, a total for new building that is bigger than all our current nuclear capacity and represents significant progress towards a low carbon future.

Third, speeding up planning decisions. Against the opposition of every other political party - and because we believe it is right for the long term future of our country - we have put in place a streamlined system for key national infrastructure decisions. The new independent body - charged with acting fairly and without delay - is up and running. Alongside our first plan on nuclear energy have come our ambitious plans for swift decisions on the development of our ports - with other plans soon to follow.

Fourth, a modern infrastructure. Going for growth means we are investing £20 billion this year in transport, double that of 10 years ago. £1.1 billion to electrify two major rail lines; a decision to go ahead with Heathrow's expansion; and, over a number of years, £16 billion committed to Crossrail. And we are also investing heavily - £800 million by next year - in flood defences. By immediate careful inspection and then reinspection of all highway agency bridges we are determined to keep safe and secure this vital part of our national infrastructure. I am conscious of people's worries about this and I can say this morning that additional emergency funding will be made available from the Department for Transport to local authorities to support the necessary repair work for bridges and roads.

Fifth, investing in skills and science. Despite the recession, a quarter of a million apprenticeships this year; 100,000 more young people training to higher
qualifications; new support for a new class of highly trained professional
technicians - with our longer term aim being 75 per cent of young people in higher education, in advanced apprenticeships or in equivalent technician courses.

And I ask each and every one of you for your support in helping to create and
promote internships, apprenticeships and new opportunities for the long-term
unemployed - as many of you are already doing -through our Backing Young Britain campaign; and to join Lord Sugar as he encourages new enterprise and talent round the country.

Our home-grown talent and skills must provide our businesses with the pipeline of skilled workers they need to compete in the global economy. But today I can assure you that alongside that - while controlling migration - we reject a blanket cap on immigration. Where we as a country need to bring in highly skilled people we will continue to do so. And so you as businesses will have the flexibility to recruit the highly skilled people you need when you need them.

The results of doubling British investment in science speak for themselves:
increasing numbers of university spin-outs; knowledge transfers; more private
research and development.

But as the Rowlands Report published today shows we know that many small and high growth companies need capital to grow - and therefore better access to finance. Where there has been market failure in the past, our new innovation fund will provide support to high-tech start-up businesses growing to £1 billion over coming years. And where there is a gap also in finance for companies looking to expand, we propose a Growth Capital Fund, a credible channel for private capital to invest in these established and growing SMEs.

So from new planning laws to airports and nuclear power. At all times, we are
making and will continue to make the critical long term decisions for Britain.

Going for growth is possible because, unlike in previous recoveries, inflation is low.

 
But it cannot be a sound bite without substance: it requires a consistent and
coherent set of policies. You cannot say you are going for growth and then in the next breath demand the withdrawal of the very measures essential to lock in the recovery and enable the growth to take place: the maintenance of the fiscal and monetary stimulus until recovery is established, and within sustainable public finances, a determination to make the long term decisions i have set out on expanding nuclear power and renewables, swift planning decisions, better transport and airports investing in skills science and with our RDAs regional economic development-and strengthening our relationships with Europe and the rest of the world. A modern industrial partnership -working with business to deliver support and intervention where it is needed but keeps out of the way when it is not.

To succeed in that future, we also need an outward-facing Britain, attracting inward investment and sustaining high value added jobs.

Over a very short time, more than 400 Chinese companies have come to Britain. In our new growth strategy, I want not just hundreds but thousands of Chinese companies in Britain, and British companies in China.

I know that we will soon sign new strategic partnerships with India.

Trade relations with the US are strong.

And to go for growth in Britain - we must also go for growth in Europe.
We must never forget that Europe accounts for 60 per cent of our trade; more than 3 million British jobs depend on Europe. The European Union is the biggest exporter in the world and the second biggest importer. And it accounts for almost a third of the world's GDP.

So in a global economy we need strong sustainable growth across Europe and
beyond.

Over recent weeks the discussion around Europe has been mostly about
personalities - not policies, institutions - not the real issue of public concern: which for me and the British people is what the European Union does for the citizens of our countries.

Europe needs to think about how we create the growth for the 10 million new jobs the continent needs. And higher levels of European growth would mean thousands of new jobs in Britain.

Just 1 percentage point higher European GDP growth for a decade means £15
billion a year net benefit to UK businesses.

Which is why I am calling on European leaders for a renewed focus on delivering European growth.

And I am pleased to report that under Prime Minister Zapatero of Spain's leadership growth and jobs will be the priority for the next Spanish presidency of the European Council.

And I will publish our British proposals for a new European growth strategy.

Now that the European Central Bank, like the Bank of England, has indicated they expect interest rates will remain low for the foreseeable future, I want to see - in this low inflation environment in Europe - a push for growth - which could involve incentives for new private investment, perhaps through new lending from the European Investment Bank; a stronger push on European wide research and development; and further action to break down the barriers preventing the single market functioning well - including in banking and financial services.

And I also value the progress being made under Andrew Adonis' leadership in
transport. So with the new high speed channel tunnel link and the new company we have set up, making recommendations next month for a north-south high speed line in the UK - let me tell you what we could ultimately achieve: a European network of train services that takes us quickly not just to Paris and Brussels but quickly to Cologne and to Amsterdam. And one that starts not just in London but in the north of our country.

So from journey times today from Scotland to London of four hours twenty minutes, to three and a half hours, then three hours, and potentially even to under three hours. So faster rail travel - not only within Britain, but to and from the mainland of Europe - is within our grasp.

It is by putting Britain not on the fringes of Europe - but at its heart - that Britain can protect its interests within Europe, and shape the future of Europe from a position of strength that can deliver growth and jobs for the British people. To walk away from this would be to deal a devastating blow to the future of British business - and it's my belief that we must never allow this to happen.

When I consider our prospects I'm optimistic about the high valued added products and services we are ready to offer the world - and the leading positions we have in industries which are relevant to the future, such as business and financial services, advanced manufacturing, biotechnology and Pharmaceuticals, aviation, our creative industries, and our higher education. These are exactly the exports that a global economy - set to double in the next twenty years - will want to buy.

As an outward-looking nation seeking sustainable growth in a world where trade is set to increase rapidly, a priority must be to attract inward investment - and we should be proud to show our strengths in these industries to the world.

So finally today I want to tell you about the British international investment
conference which I will host in London early next year - with invitations from our trade minister Mervyn Davies to British and foreign investors to come and see the great opportunities that Britain can offer the world.

It is well said that those who build the present in the image of the past will miss out entirely on the challenges of the future.

We are now in a new age of global change. And we should have confidence that, together, we can and will establish Britain's place at the centre of this global economy.

Related links

PM sets out plan for growth in CBI speech, Number 10 23 November 2009