John Longworth at BCC Annual Conference: ‘Great Growth is Not a Luxury, It’s a Necessity’
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Director General,
* BCC Director General,
* Keynote speakers include: Rt Hon Philip Hammond MP; Rt Hon Michael Gove MP; Rt Hon Dr Vince Cable MP; Rt Hon Ed Balls MP;
Today (Tuesday), the British Chambers of Commerce (BCC) will hold its Annual Conference at the
In his Annual Conference speech today, BCC Director General,
"Good morning ladies and gentlemen.
"For the third time, I have today the privilege of addressing you at our Annual Conference.
"Bigger, better and more exciting than ever - Accredited Chambers of Commerce and businesses are now able to participate, not only from all parts of the
"Nobody, I am sure, will have failed to notice that the title of this conference is 'State of the Nation - Good to Great', so I thought I would start the proceedings by looking at why we have focussed on this theme, and some of the challenges that we in
"It may be obvious to us in this room why great growth is so important, but surprisingly there are many people out there who do not get it, do not subscribe to it, and do not think it is the most important thing for the
"The simple fact is that it is only through wealth creation, through sustainable, great growth that we can afford all of the things we want like the green agenda, defence, emergency services and overseas aid. I have said it before and I cannot repeat it enough - achieving sustainable, great growth should be and must be the number one priority of any government, and our political class needs to be more economically literate and business orientated.
"But there is a more immediate reason for this laser like focus; we have a very large national debt and very large private debt hanging over the
"Let's make no bones about it; the Chancellor has pulled off a brilliant Houdini-like trick. In the last few years he has talked tough on deficit reduction, but to his credit he hasn't actually applied deficit-reduction measures too severely. Thanks to this balancing act, he has successfully kept the confidence of the global markets while avoiding the social strife that characterised the 1980's. He has bought the time needed to restore growth to the economy. Contrary to popular opinion, we haven't really seen austerity in the way, for example, it has been applied to many countries around the Eurozone - such as
"The rub is that the next stage of debt reduction will require more belt tightening, possibly even real austerity in some quarters, unless we are able to achieve great, sustainable growth. There is a debate to be had as to what extent this is necessary, however - whoever is in government next will face very hard choices. The programme the Chancellor has outlined will require significant cuts in public spending in those departments that are not ring fenced - Business, the Home Office, Welfare, Local Government, Defence and Higher Education will have to face cuts of more than 30%.
"Ironically, some of these departments are important for economic growth.
"Alternatively, the government will have to raise more tax, which is also a potential brake on economic growth - particularly when, as we have seen this year, a tiny number of people are already paying an alarmingly large share of the tax collected in
"So, while it is good to have the economic cycle working in favour of
"Great growth is not a luxury, it's a necessity.
"So what are the challenges? Well there are
"As they say, 'We live in interesting times'. In the next twelve months or so, the
"All of these events in the
"Although it is shrinking, the
"Is it credible for a global reserve currency to be based on 'Fiat' alone, to forever simply print money in order to counter trade imbalances, particularly when its principal creditor,
"The Eurozone, for its part, is in much better shape than when we met last year.
"Is it the Eurozone that will shape the future political and economic landscape of
"Will the answers to the question of Eurozone sustainability mean a Eurozone of inter-governmental agreements outside of the EU structures, the creation of a true
"These are much bigger questions, and are much more fundamental to our business community, even than whether we re-negotiate a few regulations - important as these may be for the present.
"The elephant in the room for any future government is whether or not it commits to holding a referendum. Looking at the Prime Ministers priorities for renegotiation published recently, and listening to the Leader of the Opposition's speech on European triggers for a referendum, I wonder whether a future government will really grasp this nettle and address what the key issues are.
"And then there is the other referendum whose name cannot be spoken among so many in the business community, lest the politicians reap their revenge. What are the economic and business implications of the choice that
"The small economic union of the
"
"Has either side in the debate answered the fundamental economic questions? Perhaps neither side can, since only through exit negotiations would those answers be known.
"Will a yes vote be disruptive? You bet it will.
"Will a no vote still lead to a fundamental shift in the political and financial settlement? You bet it will.
"Regardless of how
"Taken together, we have big economic and political questions on the horizon - much bigger than just a simple, cyclical economic recovery alone, and much bigger than one country alone.
"Many of these issues have timescales of many years and are imponderable and will therefore be largely discounted in business planning and investment cycles. But the general atmosphere of uncertainty naturally detracts from investment confidence, and we have seen in the official statistics that exports are themselves under performing and investment is the only measure which is not yet at pre-recession levels.
"If we are going to achieve long term sustainable great growth in our economy, we must stimulate investment.
"Business must become more long-term in its planning, address these imponderables and mitigate them. And in so doing, de-risk, remove the fear factor and invest. Most of all business must accept the one new norm that does exist, that the global environment is more uncertain and get over it.
"It is those businesses that have the courage to grasp the opportunity in these times that history tells us will do amazing things.
"Just as important, the government must do all it can to counter balance the uncertainty with bold measures that provide support and medium term incentives for investment. While they might not be able to make the risks go away, government certainly should do everything possible to make investment attractive as our ship sails on stormy, global seas - by committing to tax incentives, favourable regulatory regimes, easy access to finance, low interest rates and a serious re-balancing towards export support.
"Of course on investment in infrastructure, the can has been well and truly kicked down the road. There are some signs of progress on the ground, many small incremental improvements. But big infrastructure, such as rail, airports and motorways are not going to happen this side of the election. We might as well save our breath, except to secure manifesto commitments. Infrastructure is vital for both doing business and for generating economic development for long-term great growth, rather than just short-term good growth.
"It is fantastic that we at the British Chambers are predicting good growth at 2.5% plus over the next few years - a super achievement. The hard working businesses up and down the country who kept at it plus the government and the Bank of
"Prospective and growing businesses need access to finance to create real value in the economy. A rejuvenated manufacturing sector will be important, although it will for the foreseeable future be a small part of the economy. It is in service sector exports, including financial services that we excel.
"People often ask me, what are services? How do we export them?
"Services are everything we do based on knowledge - insurance, finance and professional services like accountancy, architects, designers and engineers. They include creative industries from television and theatre, through to literature, games design, sport, cinema, the IT sector, science, healthcare, education, the fashion industry, PR and Marketing. We are brilliant at services and very successful at exporting these - particularly to countries who share our language and, often, our legal system.
"Underpinning all of this is access to finance.
"If we are to stimulate great growth, particularly among fast growing, small and mid-sized companies who are the vanguard of an entrepreneurial economy, we need the creation of a properly functioning business bank, a better developed retail SME bond market and properly resourced support for exporting - both export promotion and export finance. All of these factors will be crucial for long-term, great growth.
"Thirty plus years ago our economy went through a revolution, which probably saved
"I have travelled the globe since then, looking at the way business is done. The world has changed. We are now, in
"It also strikes me that our most successful competitor countries in global trade have not only restructured their economies, as we did, they have also developed a close partnership, a true partnership, between government and business, and between business and government. This is not a servant/ master relationship, a relationship based at the tradesman's entrance, but a true partnership of equals working in the national interest. These competitor countries understand and value their national interest - and pursue it relentlessly.
"A true free marketeer would have said thirty-odd years ago, that the only role for government is to get out of the way, and that government should only intervene in markets where there is market failure. I was this person, and this fundamentally remains a good starting point. However in a globalised world, government also has a crucial role in creating the right environment for entrepreneurial success. A partnership between business and government will be crucial in an export-led recovery if we are to achieve truly great growth. Most importantly, for us to gain this last ounce of advantage, it will require a culture change in both business and Whitehall if
"Education, education, education - what a meaningless phrase this proved to be. But there is no doubt that in the knowledge based economy that is the
"The
"If the top universities draw upon the best talent in the world to provide competition for the
"But it's not at the academic end of the spectrum of the talent pool that we have the greatest problems. Some educational institutions do a great job linking with employers, but far too many have lost the vocational plot. They need to provide for the talents of our young people who are technically or vocationally minded, and provide our employers with people who are enthusiastic to learn and develop, capable of communicating and getting stuck in. Preparing this next generation for the British workforce is too important to the economy for us to ignore.
"Connecting the world of work and academia is a challenge, which Chambers of Commerce are uniquely placed to help with, but which must also be reflected in the courses provided and in the culture of learning in the institutions concerned.
"Last, but by no means least, is the promise of opportunity for talented youngsters who have practical or artisanal aptitude. There is a critical need to encourage and facilitate hard pressed employers to take on apprentices, to give the under twenty-fives 'a go' and to get our young people, who are our future, into meaningful employment. It is incumbent upon the educational establishment to encourage this and to help to develop the necessary work ready skills and to connect young people with employment. It is important to recognise the range of talents that our young people have, and if this requires selection for ability and aptitude, in the way that so many successful, competitor economies do, then politicians and the educational establishment need to get over it.
"Chambers of Commerce can and are playing a vital role in connecting the worlds of education and work, encouraging proper apprenticeships, and I am pleased that the Chancellor has committed to continue support for this.
"Of course entrepreneurialism, creativity and innovation know no boundaries and are no stranger to all three of the talent pools. And it is important that education and employers encourage and nurture these. It is these attributes that most define
"
"Our Prime Minister has said on numerous occasions that exports and inward investment are vital to the re-balancing of the economy if we are to win the global race. In order to achieve the Prime Minister's goal, we will need to grow exports by around 10% per annum, year after year until 2020.
"This is not impossible. Official figures have shown growth like that in previous years, but it will be increasingly tough to sustain and official figures in recent years do not bode well. In 2012 as a nation we only managed 1.9% growth in goods exports, and only 0.6% in 2013. So far the national plan has failed.
"By contrast, the number of
"Although a small and very modestly funded project at the moment, I am confident that this will prove so successful, it will be seen as the cost effective solution to the Prime Minister's challenge for the years ahead.
"In our global race to create great, sustainable growth,
"We have secured good growth for the time being and
"But we can't rely on luck alone. We need to invest, to innovate, to export, to build. We are on a long road to truly great, sustainable economic growth - and there are some twists and turns to navigate up ahead.
"It will be some time yet before
"I am certain, however, that
"And when we get there, I am confident that we have the dynamism (if not the dynamite) to 'blow the bloody doors off' the global market.
"Have a great Conference."
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