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Gordon Brown Explains Vision Of "Global Europe"

Gordon Brown explains vision of "Global Europe"

The Prime Minister has set out his vision of a "Global Europe" that is an "open, outward-looking and flexible" competitor in the world market place.

Speaking to business leaders at a London conference, the PM said that Europe should act as a "driving force" in the changing global economy and called for continued economic reform and liberalisation. Mr Brown highlighted the importance of the EU to British trade and pledged to keep the country "fully engaged" in Europe's reform process.

The PM said:

"My vision of Europe moving forward is global Europe - not just an internal single market that looks inwards but a driving force of the new fast-changing global market place. An open, outward looking, flexible global Europe competing on and prosperous because of its skills, its innovation and its creative talents.

"Even in the face of rapid globalisation, our trade with Europe continues to rise, meaning Europe is as important to the future of Britain than ever. So European Union membership is good for Britain and British membership is good for Europe."

Mr Brown said that reforms should focus on encouraging innovation and streamlining regulation, raising investment in research and development and increasing efficiency in order to keep consumer costs low on items such as energy. Economic reform was an absolute priority following the conclusion of the institutional debate with the signing of the EU Treaty in December, he said.

The PM added that he would meet European G8 leaders later in January to discuss how to maintain economic stability during the current financial uncertainty in credit markets.

***

FULL SPEECH

14 January 2008

Speaking to an audience of senior business leaders in London the Prime Minister outlined business priorities for a 'Global Europe'.

Mr Brown said that the completion of the Lisbon treaty means there is now an opportunity to move on to address the challenges that matter most to Europe's citizens: stability, growth, competitiveness and jobs.

Read the speech

Beyond The Reform Treaty: Business Priorities For A 'Global Europe'.

I am delighted to be here today - in advance of my visit to China and India later this week - to discuss with you:

  • The priorities for Europe in the coming years;
  • The potential for European countries to work together with a renewed common purpose to succeed in the decades ahead;
  • And the reforms we need to put in place to ensure Europe remains a leader and a success story in the new global order.

And I would like to thank 'Business for a New Europe', led by Roland Rudd for organizing this event. BNE is a new and important voice making the positive and practical case for a strong but reformed Europe to meet the needs of both business and citizens.

You are all here because you know - as I do - that the European Union is key to the success of business in the UK and in some ways the UK can be a significant lever for business success across Europe.

And as we face increasing global economic uncertainty, this is as true today as ever.

The countries and continents that will succeed in the new era of globalisation will be those that are open rather than closed, for free trade rather than protectionism, are flexible rather than rigid, and invest in high skills and the potential of their people.

My vision of Europe moving forward is global Europe --- not just an internal single market that looks inwards but a driving force of the new fast-changing global market place. An open, outward looking, flexible global Europe competing on and prosperous because of its skills, its innovation and its creative talents.

In this way the enlarged Europe moves forward from its original objective of preserving the peace to its future achievement --- widening and deepening opportunity and prosperity not just for some but for all.

That is why I am confident that - momentous as the challenges we are currently facing are - we can, by making the right long term decisions, meet and master them.

More than perhaps any other twelve month period in recent times, the last year has brought home to all of us just how much the economic world is changing -

  • Just how big and historic the shift in production and services to Asia now is, with 1 million manufacturing jobs and hundreds of thousands of service jobs moving from America and Europe;
  • How fast the speed of technological change is, with over a billion people worldwide now connected to the internet and more than 1,500 patents for new inventions issued every day;
  • Just how much being part of a global economy means we are affected directly and sometimes instantaneously by events in other countries and continents.

And the latest financial turbulence has been a wake-up call for every economy in every part of the world --- impacting on all countries including Britain and others in Europe - and testing the stability of our financial systems.

So right across the world we know this will be a difficult year.

In Britain we are well-placed to withstand this financial turbulence:

  • Inflation is 2.1 per cent - compared with 3 per cent in the EU and 4 per cent in the us - which has allowed the bank of England to keep interest rates low;
  • According to the IMF, in 2007 the British economy was the fastest growing in the G8 and is forecast to be the joint fastest in 2008. The economy in Britain has now grown for 61 consecutive quarters - the longest sustained expansion on record. Between 1997 and 2006, the UK economy grew in total by 28 per cent, compared with 10 per cent in Japan, 13 per cent in Italy, 14 per cent in Germany, 21 per cent in France and 31 per cent in the us;
  • Employment in Britain is at a record high and we have a higher employment rate than any of the major European economies, Japan and even the US;
  • Our public finances are in a sustainable position and government debt relative to the size of the economy is lower than in the Euro area, the US and Japan.

But what is clear is that at this time of global economic uncertainty, we should not be throwing into question -as some would - the stability of our relationship with Europe and even our future membership of the European Union --- risking trade, business and jobs. Indeed, I strongly believe that rather than retreating to the sidelines we must remain fully engaged in Europe so we can push forward the reforms that are essential for Europe's, and Britain's, economic future.

The EU is key to the success of business in the UK:

  • Europe accounts for nearly 60 per cent of our trade;
  • 700,000 British companies have trading ties to Europe;
  • And 3.5 million British jobs depend upon Europe.

And even in the face of rapid globalisation, our trade with Europe continues to rise, meaning Europe is as important to the future of Britain than ever.

So European Union membership is good for Britain and British membership is good for Europe.

The European single market gives British businesses access to a market of 500 million people, to cheaper products and services, and to a much wider potential workforce, with a greater range of talents and skills.
And EU enlargement - perhaps Europe's greatest achievement - has strengthened our stability and prosperity even further.

I am pleased that the European Commission, led by President Barroso, understands the absolute priority of strengthening the competitiveness of the European economy and is providing genuine leadership on issues of deepening liberalisation and economic reform.

But if we are to make the most of the opportunities of the new global economy - and strengthen the foundations for economic success in the longer term - we will need to do more to ensure continued stability and to strengthen and deepen economic reform.

As the December European Council concluded, the institutional debate inside Europe is now settled for the foreseeable future. So with the completion of the Lisbon treaty - which was necessary to enable an EU of 27 to work together and ends the process of institutional reform for the foreseeable future - we now have an opportunity to move on to address the challenges that matter most to Europe's citizens --- in particular, how we can sustain stability, growth, competitiveness and jobs.

Our main priority is to ensure the stability of the British and European economies and to have the strength to take the difficult long-term decisions.

People need to know that their governments are doing all they can - both internationally and nationally - to maintain stability and growth. So all countries in the EU must work together to both take the immediate measures necessary and to lead the long term strengthening of international capacity to secure greater financial stability.

I will be meeting European G8 leaders later this month to discuss measures for achieving international stability. And my hope is that the EU can lead the way in responding with the reforms that are needed.

Primary responsibility for managing risk is, and must remain, with individual financial institutions and investors, but this needs to be backed up by strong national and international regulatory frameworks.

We are encouraging the Financial Stability Forum and the International Monetary Fund to look at the international steps we should take including to put in place a better early warning system for financial crises.

And we will seek to build consensus on:

  • Tightening up procedures for dealing with solvency and liquidity issues;
  • Returning confidence to the markets through transparent and accurate valuation to write offs and losses. The quicker this is done the quicker liquidity will return;
  • And on assessing the role of credit rating agencies where the growing complexity of instruments had led to greater reliance on rating - and investors themselves need to challenge their own reliance on ratings.

We need greater transparency in the system for investors, markets and regulators through improved valuation standards; better risk management; and more public information from institutions about complex products such as structured investment vehicles.

All measures that show the importance we attach to taking the tough long-term decisions to ensure the stability of the economy.

And we must take the same tough long-term approach when pushing forward wider economic reform in Europe.

With china now decoding DNA and Bangalore in India the pre-eminent global centre for software development, competition from Asia is no longer simply in mass production manufacturing based on low skills, low technology and low wages, but increasingly applies right across the value chain.

So the new race is not to the bottom but to the top.

And because we know that Europe can't compete on low skills or low-grade products but only in high tech, high skill, high value-added goods and services, we need to become even more flexible and competitive.

And because the Lisbon strategy was written when the challenge for us was to keep up with the sole economic superpower - America - and preceded the rise of India and china, we now need to move much faster on reform.

First, we need a renewed focus on modernising the single market so it enhances the EU's ability to compete in the global economy.

Since 1992, the single market has boosted prosperity in Europe by 225 billion euros per year, creating 2.75 million jobs.

But we have still a long way to go to secure for business and consumers the full benefits in commercial opportunities and lower prices.

Britain is pushing for implementation of the services directive which will make the free movement of services, as well as goods, a reality. And we will continue to work towards further liberalisation in the energy, post, transport and telecoms markets -- where market opening could generate between 75 and 95 billion euros of potential extra economic benefits and create up to 360,000 new jobs.

If we are to prove that Europe matters to the issues that affect its citizens, there is no greater test than our ability to make a genuinely single market work in the interests of European business and European consumers. In a period of high and escalating energy prices, for example -- wholesale prices having risen by around 50 per cent since August last year -- we must do all we can to deliver an efficient European market that keeps costs down for consumers. And of course here in Britain we will continue to work with Ofgem to ensure the UK energy market remains genuinely competitive.

Second, Europe needs to focus less on regulation and more on promoting enterprise and encouraging innovation.

We have now seen a historic commitment from the EU to reduce administrative burdens on business and citizens by 25 per cent by 2012 - but this must now be delivered on the ground so that we replace the old model that assumed everything must be inspected and everyone must fill in forms with a more proportionate risk-based approach.

Our aim is to raise European R&D investment closer to 3 per cent of GDP ---- and because we know that there are real benefits in terms of new business and new jobs from the low carbon economy to which Europe is now committed, we will do more to ensure that we have the skills and the expertise for the environmental technologies and industries of the future.

To create a prosperous Europe with jobs and opportunities for all, this essential drive for flexibility, dynamism and entrepreneurship must be accompanied by an active and responsive labour market policy.

With china and India each year now turning out nearly 2 million more graduates than Europe, there is a premium on upskilling everyone in our economy and we cannot afford to write off any adult or young person.

Instead we have to break down all the barriers that hold people's talent back.

So it is right that Europe move from what are often called passive labour market policies to active labour market policies - policies which do not simply pay people to stay out of work but which encourage people to move from welfare to work and give them the skills they need to make the most of their potential.

And fourth, we must enhance and intensity cooperation on environment. British people know there is no Britain only solution to climate change just as French people know there is no French only solution and German citizens know there is no German only solution. But Europe working together and leading a more united global approach can make a difference. And in the years to come the countries of Europe can show we can work together to cut carbon emissions, promote renewables, lead in environmental technologies and promote inclusive and sustainable development. And I see Europe leading the world in cutting carbon emissions and in working with the international community towards a new post Kyoto agreement.

At the heart of a more competitive Europe in the 21st century must be a long-term commitment to a more outward looking relationship with the rest of the world. This is what I mean in practice by 'global Europe' - a Europe that knows it must face outwards if it is to be open for business

Day by day the EU is working to help spread peace and stability beyond its borders - from helping to build a better future in Kosovo, to putting pressure on the regime in Burma, to working for a world trade deal that is in the interests of developed and developing countries alike. The EU can now do more to make a positive difference.

Europe can lead the way in pressing for reform of our international institutions which - built for just 50 sheltered economies in what became a bipolar world - are not fit for purpose in an interdependent world of 200 states where global flows of commerce, people and ideas defy borders.

We need an IMF with a renewed mandate that goes far beyond crisis management to crisis prevention;
A World Bank not just for development but for the environment;

An enlarged UN Security Council that is more representative, more credible and more engaged.

And a new rapid response international commitment to assist rapid reconstruction of post-conflict states.

And we should work urgently for a successful outcome in the Doha trade talks.

Unlike some people who view the rise of China and India and the next stage of globalisation as an economic threat to the advanced industrial economies, I see it as an opportunity that Europe is well placed to seize - and favour an enhanced dialogue.

But it is essential that we respond to change with enhanced flexibility to secure comparative advantage and make globalisation work for us here in Europe.

It is through this positive, pro-european but realistic approach that the EU can realise its full potential in the era of globalisation.

Pro-European, because it is only through active engagement that we can meet our common goals. Realistic, because we know that Europe cannot ignore the enormous global changes that affect us all.

And this can only be done best by business and government working together where there is common cause. So today I want to call for a new partnership with business - to work together making the case for this pro-European realism. Positive about engaging in Europe, leading the case for reform and adaptation to the new world.

Together forging a new global Europe that is fit to meet the challenges ahead, and to serve its citizens' interests. Together showing that the success of business and commerce in an outward looking Europe can advance peace, opportunity and a sustainable prosperity in the decades to come.

So I look forward to our discussions this morning to show how out of dialogue we can build consensus and a partnership for a Britain working with others and leading the way in the new global Europe.

ENDS

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