It’s a great pleasure to have the opportunity to speak to the Assembly and Business Trust.
In these difficult economic times, it is more important than ever that elected representatives understand business and industry and that business and industry understand elected representatives.
I know that the Assembly and Business Trust does great work in fostering mutual understanding between Northern Ireland’s political leadership and its business community.
Providing the right conditions for enterprise to flourish and create the jobs and prosperity on which we all depend is crucial for any government, be it at national, devolved or local level.
It’s something that has shaped my time in public life throughout my tenure as MEP, MP, Minister and now Secretary of State ... and it remains for me a key motivation for the work that I do for the Government and for Northern Ireland.
Today, I want to talk about the measures that the UK Government is taking to restore economic growth and sustainable recovery.
I want to set out why I think it would be disastrous if we were to change course now.
And I’m going to set out some of the action we are taking to support the Executive in its efforts to re-balance the economy in Northern Ireland.
Three years ago the UK was in the midst of the worst economic and financial crisis since the 1930s.
We were paying the price for a decade of irresponsibility…
... a debt-fuelled boom followed by the biggest bust in living memory.
It’s easy enough to blame the banks for the economic crisis.
And yes they need to take their share of responsibility for what happened…
... as do the people who removed the Bank of England’s historic role in making sure that banking credit was kept within responsible limits.
That was a crucial regulatory safeguard and it should never have been scrapped.
So I’m pleased to say that following the Vickers’ Review that this Government set up ... we are reforming the banking system to reverse this mistake and others made on banking regulation by the last Government.
Yet in reality the banks only made a bad situation worse.
As a result of the financial mismanagement of the previous administration, the UK had the largest structural deficit of any major western economy when the Coalition took over.
It was of similar proportions to that of Greece.
For years the country went on a public spending binge that it simply couldn’t afford, with increases year on year that far outstripped growth in the economy.
Unlike governments in countries such as Germany and Canada, Labour failed use the sunshine years of boom to fix the roof.
Fixing the public finances in times of prosperity so you’re better prepared for the lean times isn’t just classic economics ... it’s simple good housekeeping ... and Labour manifestly failed to do it.
Instead, they doubled the national debt and took us to the brink of bankruptcy.
We’re still paying the price for that failure which left the country in a much weaker position to deal with the economic tsunami when it hit in 2008.
It currently costs us around £120 million a day in interest on our debts.
In fact our debt interest is more than twice this year’s budget for the whole of public expenditure here in Northern Ireland.
That is the legacy that the Coalition Government inherited when it took power just three years ago.
Our first and overriding priority therefore had to be implementing a credible strategy to deal with the largest deficit in the UK’s peacetime history.
And that’s precisely what we’ve done.
As a result of the difficult decisions taken by George Osborne, the deficit is down by a quarter.
Our borrowing costs are at record lows helping to keep down mortgage and interest rates … which is so important for businesses and families right across the UK ... including here in Northern Ireland.
Business taxes have been cut and since the General Election the private sector across the UK has created over a million new jobs.
UK unemployment is now lower than when the Coalition Government took office and the numbers in employment are at record levels.
There are tentative signs that the economy is healing.
There’s no doubt that we’re still on a difficult road.
But I have no doubt that it’s the right road.
And to change course now would be disastrous.
That is the lesson to be learned from the decision by one of the credit rating agencies to downgrade the UK from AAA to AA1.
It should serve as a wake-up call to anyone who thinks that there is a softer or easier alternative to what the Government is doing.
It’s a stark reminder of the single most important truth about our economy.
The UK has a huge debt problem, built up over many years, and we’ve got to deal with it.
If we don’t deal with it then interest rates will soar, homes will be repossessed and businesses will go bust.
And if you doubt that, just look at what happened to all those European countries now deep in recession.
As Moody’s made clear when they announced their decision on the UK’s credit rating, any weakening of the commitment to get on top of our debts would risk further downgrades in the future.
So far from weakening our resolve to deliver our economic recovery plan, the Moody’s decision must redouble that resolve.
We cannot go on as a country spending ever more money that we haven’t earned.
Yet, astonishingly, some politicians still think we can … that the answer to the debt crisis is to build up more debt by borrowing more and spending more.
But that’s precisely the same toxic approach that got the country into this mess in the first place.
And it’s an approach that’s still advocated by many of the same people who were responsible for that mess.
In his response to the credit downgrading, the Shadow Chancellor admitted that Labour would borrow billions more … a massive £200 billion more according to the Institute for Fiscal Studies.
My own Shadow, Vernon Coaker, advocates big cuts in VAT to boost the economy … but never tells us where he’d find the £15 billion it would cost to pay for it.
If Labour and Ed Balls haven’t learnt anything from the mistakes of the past then the only conclusion must be that they will never learn.
They’d make the same economic mistakes all over again…with the same disastrous consequences.
Dealing with the deficit and keeping interest rates low is the pre-requisite for sustainable recovery.
But I’m the first to admit that on its own it is not enough.
We are in a global race for jobs and investment.
So we need to restore our economic competitiveness.
That’s what the Government is delivering by creating the conditions in which the private sector can expand and flourish.
So we’ve cut the main rate of Corporation Tax from 28p to 24p.
And by the end of this Parliament it will have gone down to 21p … giving us the lowest corporate tax rates of any major developed economy.
Only a few weeks ago, the UK topped KPMG’s league of best countries to do business … ahead of Switzerland, the USA and France … for the first time ever.
We’ve introduced the Funding for Lending Scheme to help businesses gain much needed access to finance.
We’ve brought forward massive investment in infrastructure projects.
Across England, we’ve introduced 24 Enterprise Zones.
We’re cutting the cost of red tape and regulations on business by a net £3.3 billion.
We’re committed to delivering superfast broadband across the country.
We’ve doubled the small business rate relief holiday until April 2014
We’re simplifying the planning system.
We’re reforming employment law to make our labour market more flexible.
And we’ve provided 223,000 apprenticeships in just two years, with thousands more planned for the coming years.
These are just some of the ways in which we’re pushing for a return to sustained growth in the economy.
Rebalancing the Northern Ireland economy
Now I appreciate that many of these policies apply only to England… and that here in Northern Ireland they are mainly the responsibility of the Executive.
Matters like planning, education, training and skills, apprenticeships, business rates and spending on infrastructure projects are all in devolved hands.
But the UK Government still has a significant role to play.
We share the objective set out by the Executive here of rebalancing the Northern Ireland economy.
In fact, we think it’s a pressing priority.
Northern Ireland remains far too dependent on public spending to underpin economic activity.
According to a number of reports, public spending here accounts for around three quarters of the whole of Northern Ireland’s GDP.
While I understand fully the historical reasons for this, it just isn’t sustainable, particularly when the public finances are under such pressure.
At the same time unemployment, while hovering around the national average, remains far too high ... albeit still significantly lower than in the Republic of Ireland.
So we need to revive the private sector.
And I believe that this can be done.
We have some world class companies in Northern Ireland, selling products across the globe, such as Wrightbus and Bombardier.
We are thriving in sectors such as financial services IT.
We have some great global brands like Bushmills.
And of course Northern Ireland is an excellent place in which to do business.
Just ask companies like Citi Group and the New York Stock Exchange who’ve invested here in recent years.
I believe that the measures we are taking to rescue the UK economy as a whole will bear fruit here in Northern Ireland.
But there is more that the UK Government can do to help.
In the Autumn Statement last December we made an additional £132 million available to the Executive for capital infrastructure projects, funded by further reductions in the costs of Whitehall.
We devolved long-haul Air Passenger Duty in order to save our direct air link with the US.
We’ve exempted Northern Ireland electricity generators from the carbon price floor … key demand from the business community here.
Derry-Londonderry will receive a share of the £50m of Government funding to create super-connected cities, joining Belfast which has already been allocated more £13m from this programme.
This is in addition to the £4.4m from the Broadband UK Fund to further enhance Northern Ireland’s excellent broadband infrastructure.
Our tax credit for high end TV will benefit the great work being done at Paint Hall Studios to attract the creative industries to NI.
Our network of embassies around the world have been tasked by the Prime Minister and the Foreign Secretary to put promoting UK business at the heart of everything they do.
The GREAT campaign is the Government’s most ambitious marketing campaign ever ... showing off the best the UK has to offer.
And the Prime Minister made the personal decision to bring the G8 to County Fermanagh because he knew it would give Northern Ireland the chance to show the world how much it has achieved in the 20 years and what a fantastic place it is to live, work and invest in.
In addition, the Prime Minister is continuing to consider the case for devolving the power to set Corporation Tax to the Assembly in order to help attract new investment.
He’ll be discussing this, along with other matters, with the First and deputy First Minister when he meets them later this month.
Just like my predecessor, Owen Paterson, I believe that devolving Corporation Tax has the potential to stimulate significant economic growth in Northern Ireland … and that’s a case I am making to my Cabinet colleagues in Westminster.
As a Government we’ve also taken action to help families with the cost of living.
Our changes to personal tax allowances have brought a tax cut for over 615,000 people across Northern Ireland and taken over 30,000 of the lowest paid out of tax altogether.
This year, pensioners have received the biggest ever single cash increase in the basic state pension.
Here in Northern Ireland it was this Government that helped resolve the crisis in the Presbyterian Mutual Society that threatened to rob many elderly and vulnerable people of their life savings.
A litre of fuel is now 10p cheaper than it would have been had we stuck to Labour’s plans.
And we are reforming welfare to make work pay and ensure that people can’t get more on benefits than the average family earns by going out to work.
So be in no doubt … this is a Government on the side of those who work hard and want to get on in life.
Of course I realise that times are still very tough.
We face huge challenges here in Northern Ireland and throughout the UK as a whole.
The continuing crisis in the Eurozone is a significant drag on economic recovery at home.
Yet there are cautious grounds for believing that a corner is being turned.
As Mervyn King put it …
“there is cause for optimism.”
He believes that recovery could be in sight.
Here in Northern Ireland in June we’ll welcome eight of the most powerful leaders in the world when the G8 Summit takes place in Co Fermanagh.
It’s an opportunity to highlight the very best of Northern Ireland on a global stage.
So let’s work together…and grasp that opportunity with both hands and tell the world about a modern, confident, forward looking Northern Ireland that’s open for business and whose best days lie ahead.