Tag: Philip Hammond

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 19 February 2019.

Thank you, for that introduction.

I am delighted to be here tonight, as you start a new chapter in the history of EEF. And it has been a fascinating history.

EEF as an organisation was founded in 1896, at a time when the second industrial revolution was just gathering pace; with new technologies being deployed across industry at breakneck pace.

That was the year the first wireless radio transmission was demonstrated right here in London. I haven’t heard the recording, but I’ve no doubt a then quite young John Humphrys did a good job of grilling some hapless politician.

As Judith also mentioned, 1896 was also the year the Daily Mail launched. What she was too diplomatic to mention was that the first ever edition carried an op-ed on the front page that confidently asserted that, and I quote: “the motor carriage will never displace the smart trotting pony or the high-stepping team”, and called for the restoration of a “two mile per hour speed limit”. Finger on the pulse – then as now!

Just in the interest of balance, when I proposed changing the speed limit it was supported by the Mail.

Today, we are more focused on when the motor carriage driver will be replaced by a computer. But we share with the turn of the 19th century a sense of living through a time of blistering change, as innovations in areas such as robotics, biotechnology, artificial intelligence and blockchain transform our economy – and nowhere is that truer than in the manufacturing and engineering sectors.

So it is entirely appropriate that you have chosen this moment to change from EEF to ‘Make UK’ – reflecting the diversity of the modern manufacturing sector. And I wish you every success in your new guise.

Let me first say a few words about last night’s news from Honda. As Greg Clark told the House this afternoon, this is clearly a bitter blow for the 3,500 skilled and dedicated workers at Honda in Swindon, and the many people whose lives will be affected – either because the companies they work for are part of the supply chain, or because they are part of the community around the plant.

Greg has spoken with the trades unions, the local MP, the Leader of Swindon Borough Council and the Chair of the Local Enterprise Partnership…

…and will shortly chair the first meeting, in Swindon, of a taskforce he’s put together to marshal government efforts to do everything we can to ensure that the much-valued workforce can find new opportunities to make use of their skills and experience.

The decision of Honda is, of course, a blow.

But despite the shock of this announcement, we must not lose sight of the fact that Britain remains a dynamic and open economy…

…that just this morning we saw record high employment numbers, and ten-year high real wage growth figures…

…and that we are an economy that has grown continuously for nine straight years…creating 3.4 million net new jobs in the process.

Our challenge is to maintain that performance, at a time of transformative change in our economy, with the technology revolution changing Britain’s economy, society and, indeed, politics in ways that we can barely predict.

But as Judith has said, the change uppermost in all our minds is, of course, our future relationship with the EU.

I understand that the ongoing uncertainty is a challenge for many of you in this room. And that the prospect – however small – of leaving without a deal is already too great, and is having very real consequences as you make difficult decisions about managing supply chains, about hiring people, about where and when to invest.

I understand the frustration in the business community about the pace and sometimes opacity of the democratic process.

I cannot make that frustration go away, but what I can attempt to do is to explain what we are doing to resolve this uncertainty.

Our priority remains avoiding a No Deal outcome, and that will be my unwavering focus. It is clear that leaving the EU without a deal would deliver a damaging short-term shock and would undermine our future prosperity and security – and in my view that would represent a betrayal of the promises about Brexit that were made during the referendum campaign.

So the solution lies in getting the PM’s deal through Parliament. That is the only way to both respect the referendum result and also supporting the economy, protecting jobs, and allowing us to leave, via an Implementation Period, in an orderly fashion, to a continued close trading partnership with our nearest neighbours.

Doing so means seeking a route to address the very specific objections that have been raised in the House of Commons. That’s our objective.

A legally binding change to the Withdrawal Agreement to ensure the backstop could not persist indefinitely would not satisfy all of my colleagues – but it would deliver the core of a majority for a deal in the House of Commons.

Such a change is not a straightforward task, and will require a spirit of compromise on both sides.

The so-called “Malthouse” initiative to explore possible alternative arrangements to the backstop, is a valuable effort in that direction.

It builds on an important concession we gained in the Withdrawal Agreement, in being able to propose alternative arrangements to the backstop – and it should be a major ongoing strand of our work, continuing at pace during the Implementation Period; one in which I hope and expect the EU will take an active part.

But, however promising as an alternative arrangement to avoid entering a backstop in the future, it is clear that the EU will not consider replacing the Backstop with such an alternative arrangement now, in order to address our immediate challenge.

The details of this initiative are still evolving, and would require significant changes to EU legislation and Customs practices that would need to be negotiated with the EU member states and others who will be affected by them.

So over the next few days, Members of Parliament need to think long and hard about the choice before them; Our partners in the EU need to be at their pragmatic best in helping to avoid the mutual calamity of no deal; and you – and we – need to carry on explaining the implications of a no deal exit, no matter who cries “Project Fear”: Because it’s our duty to communicate the reality of the situation, to the people we represent.

So our most urgent task is to secure a deal that will protect our future relationship with our closest neighbours and most important trading partners.

But however close that future relationship, it will not be as close as the one we have now. So there will be change ahead.

Our country has always seen itself as somewhat distinct from our European neighbours; somewhat more global in outlook.

Brexit will be our chance to show that we can combine a strong and continuing partnership with the EU, with a new focus on building on our historic overseas relationships, and forging new links with the fastest growing economies of the world.

Because that world is changing around us – a rapidly growing middle class, huge advances in innovation and technology, and a shift in the balance of wealth and power all mean the opportunities have never been so great.

But these emerging markets are a competitive place, and the key question for the UK will be: how do we establish our competitive advantage in this fast-changing, globalised world? How do we set out our stall in the bustling international marketplace of the 21st Century?

We have a choice:

Some people – on both the left and right – would have us fight again the economic battles of the past: at one extreme, an agenda of widespread nationalisation, penal taxation and heavy state regulation; at the other extreme, a slashing of tax rates and shredding of regulation.

Neither would deliver what is needed for our competitiveness as a 21st century mature economy with an ageing population.

So, I am clear that as Britain rethinks its competitive advantage in an ever more globalised world, we must factor in the changes happening around us and engage with the world as it is, not as it once was; we must find solutions rooted in the pragmatism for which this country is rightly famous, not in populist rhetoric

That means building on the distinctive strengths that we already have as a country. And my message to you tonight is that Britain’s modern manufacturing sector is and must remain one of those distinctive strengths and competitive advantages.

If we can get it right, your sector can prosper under our unavoidably more global outlook in the future – and be a core part of the high-tech, high-skill ecosystem that defines the future economy we want to build.

I want to say a few words about what we are doing – and what we need to do – to deliver on that ambition, in three specific areas – skills, innovation and infrastructure – and I hope in doing so, I may provide a worthy response to some of the challenges Judith posed in her opening remarks.

The first priority for any business these days, as all of you know, is skills; making sure you have the right people to make your business grow.

For too many years, our education system has been too focused on getting people into university, at the expense of other routes into work…

…focusing on the top level skills of the few, at the expense of the more practical capabilities of the many…

…and in doing so, we’ve hollowed out our manufacturing skills base…

…so that all too often the demographic profile of skilled workers inside companies looks even more daunting than the demographic profile of the country as a whole.

But we are changing that.

We know that the skillset we need for our advanced manufacturing industry requires us to focus, not just on degree level skills, but also on a wide range of specialist, technical skills.

That’s why we are reasserting the importance of technical education in our national life – so that we can more effectively train the next generation of engineers, to make sure that employers have the skills they need, and young people are match fit for the labour market of the future.

To do that, we have committed £500 million a year to introducing a new system of T-level vocational training…

…We’ve put the first £100 million into the new National Retraining Scheme, to make sure that British workers can face the challenge of technological change without fear…

…and through the Apprenticeship Levy we are delivering 3 million high quality apprenticeships in this Parliament.

But, of course, we want to work with industry as we deliver these reforms.

Judith – you challenged me on progress we’re making with the apprenticeship levy.

We have heard your concerns loud and clear – and taken action:

halving the co-investment rate from 10 to 5%
increased the amount you can transfer to your supply chain to 25%
we’ve put millions into the Institute for Apprenticeships
and we’re committed to consulting on how the levy operates in the future through an engagement process, which has already begun
We’ve conducted a series of regional roundtables with 59 employers attending to date – including an EEF policy advisor – and it’s only the 19th of February.

And may I also say in response to your plea for a nationwide rollout of the North West pilot of “Made Smarter”, that I am delighted by your enthusiasm for this ground-breaking programme. But it was only launched in November, and the point of piloting is to learn what works and what doesn’t. But I can absolutely promise you that what works will be rolled out in due course.

As well as making sure that British workers have the skills they need to thrive and prosper, we must also invest in the technologies of the future.

Our history is one of innovation – we are the nation of Stephenson, Faraday and Whittle. And today, Britain can lead the world again as we exploit a new wave of scientific and technological discovery pouring out of our world class Universities and our industrial research centres.

I do not need to tell the people in this room about the impact of this technological progress on the economy – just think of the changes you have seen over the last twenty years in automation, materials and manufacturing techniques. And everyone is familiar with the stats that point to Britain’s leading role in scientific research: With just 4 percent of the world’s researchers, but 15 percent of the world’s most highly cited articles.

But the leap from research lab to commercial product does not happen by accident.

And for too long, while we’ve been brilliant at invention and discovery, we have been near the bottom of the class in exploiting that home-grown genius to drive our own industry. But I’m glad to say that is changing.

And the manufacturing sector is at the forefront: you constitute 10% of the UK economy, but provide 66% of all business expenditure on research and development.

Since 2016 we have committed an additional £7 billion to science and innovation. This 20% increase is the sharpest and most sustained rise in public R&D investment since records began – clear progress towards our ambition for a government-industry partnership to lift economy-wide R&D spending to reach 2.4% of GDP by 2027.

But although government intervention is important, we understand that private enterprise is the real engine of innovation. So we are also making sure that the conditions are right for you as leaders and entrepreneurs to be able to invest in growing your businesses.

Support for businesses through R&D tax reliefs has tripled since 2010.

One of the areas EEF have been rightly challenging us on is capital investment incentives – and we have acted.

At Budget 2018 I increased the Annual Investment Allowance from £200,000 to £1 million for two years, providing hundreds of millions of pounds more tax relief

…and I also introduced a new, permanent ‘Structures and Buildings Allowance’, providing billions of pounds of new tax relief for firms investing in new non-residential buildings and structures – delivering a long-standing demand from industry.

And what is good for individual businesses is also good for the economy and for households – increasing productivity is the only sustainable way to boost real wages – and rising real wages are the sure-fire way to sustain a contented and stable workforce – and a satisfied electorate. A coincidence of objective that business people and politicians can celebrate together.

Today’s real wage growth figures are good news – but only sustainable if backed by productivity growth. And boosting our productivity also means investing in infrastructure, because even with the best staff and the most high-tech equipment in the world, your businesses won’t succeed without roads to transport your goods, railways to transport your staff, or fast broadband to deliver the digital lifeblood that sustains all modern businesses.

The cornerstone of our plan to boost productivity is the National Productivity Investment Fund, £37 billion of funding through to 2023-24 on top of the core investment in roads, rail, R&D, housing, and social infrastructure – specifically targeted at raising Britain’s productivity.

Together, these programmes are modernising our strategic roads network – which carries two-thirds of all freight

…delivering the biggest rail programme since Victorian times…

…and bringing our digital infrastructure up to date, with a strategy for delivering a nationwide full fibre network by 2033.

And we are supporting industry to make the transition to a low-carbon economy, with £315 million for a new Industrial Energy Transformation Fund, which will help businesses with high energy use – like those in your sector – to cut their bills and reduce their emissions…

…all of which together means over the next five years, total public investment will grow by 30%, to its highest sustained level in 40 years.

Judith, to return to your challenges, I hope I have shown this evening how government understands its role in supporting UK industry through the coming tech revolution, and in driving up productivity for the benefit of our businesses and our citizens – delivering our vision of a high-wage, high-skill economy.

The Modern Industrial Strategy encapsulates our clear commitment to play that role.

And sets out our plan to do it:

By putting technical skills back at the heart of our education system…

…investing in new technologies and innovation…

…modernising our roads and railways…

…cutting taxes for workers and for the businesses that employ them…

…reducing your energy costs – and your carbon footprint…

…doing everything we can, in other words, to make sure that Britain is known around the world as a great place to be a maker.

And I hope I have convinced you that I understand all too well the scale of the challenge that Brexit uncertainty represents for many of you…

…and that I am committed, and the whole government is committed, to doing everything we can to dispel that uncertainty as quickly as we possibly can…

…and that the approach I have set out tonight is the right one for Britain’s economy, regardless of Brexit.

Laying the foundations for our future prosperity in a world that is going to look and feel very different – for many different reasons beyond Brexit.

And in 100 years’ time, when my successor as Chancellor of the Exchequer gives a keynote speech to MakeUK’s annual conference, they won’t be talking about Brexit – or, at least, I hope they won’t!

They’ll be talking about the astonishing transformation of our economy that occurred through the tech revolution of the second quarter of the 21st century…

…about the remarkable achievement of a small, damp island, off the north west coast of Europe…

…still, in 2119, a world leader in high tech manufacturing and sophisticated services…

…a watchword for agile, flexible regulation…

…a European beacon in an Asian-dominated global economy.

I know we can do it.

And I look forward to working with you all, and with MakeUK, to make it happen.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 30 January 2019.

Paul, thank you very much for those kind words of introduction, and for inviting me to speak to you again tonight.

Let me start where you left off, by offering my thanks to John, as he steps down later this year as Chairman of TheCityUK’s Board.

I know you are a keen singer John. So let me just say that your leadership was pitch perfect…and best of luck with the next gig.

And, of course, thanks to you too, Paul, as you start your final year as Chairman of the Advisory Board.

This really is the changing of the guard for TheCityUK, and I thank you both for your exceptional leadership over a critical period.

Let me also pay tribute to all of you in this room.

You lead and champion a crucial sector of the British economy…

…supporting business with capital and services…

…and households with mortgages, insurance and pensions.

You contribute over £176 billion of GVA to our economy…

…creating a trade surplus of over £75 billion at the last count…

…and employing more than 2 million people in every region and nation of the UK.

But as the world changes, so must The City.

And I want to talk this evening about how we work together to ensure that your sector remains at the forefront as Britain rises to the challenges of a changing world…

…and that the UK continues to be a world-leading finance and business centre long after the Brexit turmoil has died down.

There is a story about a politician whose wife would introduce him at speaking events, by saying:

I am afraid my husband cannot speak for more than ten minutes, or he will have a problem with his throat – I will slit it.

My wife, sadly, isn’t here tonight, but with the dessert still to come, I promise you I will pretend she is.

Let me start by updating you on Brexit.

I do, of course, understand your frustration at the Brexit process.

I cannot make it go away…

…(the frustration nor the process)…

…but I can try to explain what is happening and what is likely to happen next.

Last night’s vote gives us, for the first time, a clear commitment by Parliament to support a deal.

But it is, of course, a deal with significant differences to the one that has been agreed with the EU…as I think the EU quickly observed!

So we face a challenging task in seeking to persuade the EU to move its position. But that is what we will be seeking to do.

The PM also made a very important commitment to those who were seeking to prevent a “No Deal” outcome.

She told them that yesterday would not be their last chance to attempt to persuade the House to do so – and that there will be an opportunity to repeat last night’s vote on February 14th.

So we now have a clear timescale: the PM will work up a new proposal to put to the EU over the coming days.

She will negotiate on the basis of that proposal for the very best deal it is possible to secure – and will bring that back for approval by the Commons.

If that approval is not forthcoming, there will be a further opportunity for Parliament to reach a majority decision about how to proceed on February 14th.

Navigating Brexit in good order is clearly our most immediate task – but it is not the only challenge on the horizon.

Nor, over the long-term, is it necessarily the most significant.

The City would be facing profound change, even if we were not leaving the EU.

The global economy is changing; an irreversible shift of wealth and power is taking place.

Dramatically higher savings rates in some Emerging Market economies…

…and the growth of a vast new middle class…

…mean the geographical balance of asset holdings is changing at a breath-taking pace.

At the same time, the technology revolution is having a profound impact on our economy and society…

…forcing us to take radical action to ensure we have the skills and talent we need for the future.

Against this backdrop, and even without Brexit, we would have had to make the case all over again for Britain as the best place in the world for financial and business services.

And we have a plan to do so.

We start from a position of strength.

The City has a long history of dynamism and agility, and significant structural advantages, that mean it is well-positioned to respond to challenges and turn them into opportunities.

The fundamentals of our economy are robust…

…we are dealing with the deficit, cutting taxes, and tackling the productivity challenge through our modern Industrial Strategy…

…and it has grown continuously for eight years – proving remarkably resilient in the face of Brexit uncertainty.

Paul, you rightly challenged me on what the government is doing about investment and infrastructure.

And I have an answer:

Through initiatives like the National Productivity Investment Fund…

…the government is delivering the biggest sustained programme of public sector investment since the 1970s…

…and is committed to 2.4% of GDP being spent on research and development, in a partnership with industry to ensure Britain remains at the cutting edge.

But despite these successes I am not for one moment, complacent about our economic performance; I know we will only stay ahead by being one step ahead of the competition.

So let me set out my vision for the future prosperity of the UK’s finance sector – and then, I promise, it will be time for dessert.

First, our future success will depend on becoming more, not less open as an economy.

The deal that we have negotiated with the EU – which remains in my opinion the best basis for a negotiated Brexit…

…means that we will retain close economic and trading links with our EU neighbours, including in financial services, even as we leave the EU.

But of course, that relationship will evolve…

…and over time we must expect EU business to be a gradually declining share of our financial services exports…

…as a steadily rising proportion will be with the fast-growing economies beyond Europe.

We are well equipped to make this transition.

We have always had a global outlook – part of the world, not just part of Europe.

Our historic relationships mean we are uniquely well-positioned to build trade and economic partnerships with the fastest expanding markets.

And we should not underestimate the significance of the change that is underway in the global balance of financial power…

…nor the scale of the opportunity it represents.

Emerging and developing economies together are home to 85% of the global population and 90% of people under 30…

…and their economies already account for nearly 60% of global economic activity and one third of global trade…

…but they account for just 10% of the global financial system.

So, as savings accumulate and the new middle class grows exponentially…

…there is an enormous opportunity for the City.

The government is taking action to support you to take advantage of this profound transformation.

Our Global Financial Partnerships strategy is an ambitious programme to build Financial Services links with sophisticated financial centres around the world…

…that will provide new levels of market access and new channels into emerging and developing economies for UK businesses.

That strategy will utilise the new flexibilities at our disposal as we leave the EU…

… as well as leverage existing approaches, like bilateral Dialogues and regulatory cooperation.

So that a Bank based in London can deliver services as easily to a business on the other side of the world as it can today to one on the other side of the Channel.

We are already seeing the first fruits in insurance agreements signed in recent weeks with the US and Switzerland.

I am grateful for your support and input in developing this strategy – and I look forward to working with TheCityUK to build on this momentum in the months ahead.

In parallel with these profound changes, the rising tide of protectionism is imposing tariffs on hundreds of billions of dollars of trade.

I am clear that Free Trade is the only way to secure prosperity around the world.

So we need to make and remake the case for free and open markets.

But we must also make the case for reform.

And nowhere is that reform more needed than in liberalising the rules for trade in services.

Services now account for 65% of global GDP…

…and as much as 80% of the most developed economies.

So liberalising trade in services would be one of the simplest and quickest ways to rebalance global trade.

Doing so would be:

…good for the global economy as a whole – IMF analysis shows that reducing trading costs for services by 15% could boost total GDP of G20 countries by more than $350 billion this year…

…good for developing countries, with the IMF and World Bank estimating that liberalising services trade could raise manufacturing productivity in these economies by over 22%…

…and exceptionally good news for the UK as the world’s second largest exporter of services.

So I very much welcome the start of formal negotiations in Davos last week on the eCommerce agreement between 75 WTO members.

But we must go further still.

The UK will lead the world in arguing for services liberalisation, through pushing for ambitious services provisions in Free Trade Agreements…

…and multilaterally through the wider WTO reform agenda…

…using our expertise to shape and influence the liberalisation of the global services economy.

In the new global economy, our world-leading record on innovation and technology will secure the UK’s competitive advantage.

Nowhere is that truer than in financial services.

The FinTech revolution is driving a remarkable transition in the way we access financial services – changing the way these services work, and the structure of the industry.

And Britain is at the forefront of it.

We’ve heard a lot about ‘unicorns’ over the last few weeks. But frankly, I’m more interested in growing tech ‘unicorns’, than slaying Brexit ones..

A record-breaking £12 billion was invested in UK Fintech in the first six months of last year alone – so I expect to see a lot more of them, grazing contentedly in UK fields, in future.

But alongside investment and innovation, a safe and transparent regulatory environment – one that fosters, rather than stifles, innovation – will be a key location driver for cutting edge technology businesses in the years to come.

So we’ve set up the Cryptoassets Taskforce to provide certainty about regulation and tax while protecting consumers and markets in the face of growing use of cryptoassets and distributed ledger technology.

We are leading the world in meeting the ethical challenges of technology innovation, by establishing the Centre for Data Ethics and Innovation…

…and through the Regulators’ Pioneer Fund, we are supporting our statutory regulators to develop world-leading regulatory responses to the challenge of new technology.

Finally, for the professional services industry, Britain must remain open to talented professionals from around the world. And it will.

As we leave the European Union, free movement from the EU will end…

…and we will move to a globalised immigration system.

But the Immigration White Paper is clear, it proposes removal of the cap on numbers for highly skilled workers, and the resident labour market test; and the continuation of short-term business mobility.

Our objective is a system that responds to public concerns about freedom of movement, while protecting our economy…

…by making sure that businesses can get the talented people they need, when they need them, with minimal friction.

We have announced a 12-month engagement period – and I urge the City to engage constructively with this process.

Domestic skills will also be crucial to the future of this sector. And I’d like to thank TheCityUK, and Mark Hoban in particular, for their crucial work on our domestic skills pipeline.

I look forward to hearing your proposals soon.

The City has long been a world-leading financial centre;

Our history is one of innovation, resilience and openness.

Our success today is built on a complex ecosystem, not easily or quickly replicable by others.

But to remain ahead, we must evolve, as we have done continuously in the past.

Managing our exit from the EU…

…developing new opportunities in our domestic market…

…and building our presence in the fast-growing Emerging Market economies.

Fighting for liberalisation of trade in services…

…embracing and shaping technology…

…leading the regulatory response to it…

…and developing the skills we need for our future.

Working together…

…capitalising on London’s strengths…

…we will build the most cyber-secure; best regulated; most innovation-friendly financial centre in the world.

The trading location of choice.

Match fit, and ready for the future.

Let’s do it together.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, at the CBI in Davos on 24 January 2019.

Let me start by passing on the PM’s apologies – I know she wanted to be here to address you this afternoon, but events have dictated otherwise.

But I am delighted to be back here in Davos…

…and to have the opportunity to address you once again.

Professor Schwab first invited political leaders to what would become the World Economic Forum in January of 1974.

It was a more leisurely affair in those days…

In between skiing, the group of leaders who gathered here in 1974 were grappling with profound economic and political uncertainties:

…the energy crisis…

…sky-high inflation…

…the collapse of the Bretton-Woods consensus.

And here we are, 45 years later…

…grappling with profound economic and political uncertainties!

Plus Ça change!

Closest to home, the terms of Britain’s withdrawal from the European Union remain unresolved, as the deadline looms ever larger.

More broadly, the global economy is slowing…

…and the threat of rising protectionism is increasingly affecting patterns of trade.

And the impact of the coming wave of technological change on our societies and our economies is becoming ever more apparent…

…bringing with it both challenges and opportunities.

But I want to argue today that even against this rather inauspicious backdrop, Britain can – and will – prosper in the years ahead.

The fundamentals of our economy are strong.

Its resilience through the turbulence of the Brexit process has been particularly noteworthy…

…and its growth prospects, according to the latest IMF forecast – providing we approve a deal with the EU – look perfectly respectable alongside our G7 peers.

Our commitment to free and open markets is deep and enduring.

And we are at the front of the pack in preparing our economy for the technology change.

So my message today is this: Britain is a great place to do business.

And we are determined, as we leave the European Union, to make sure that it remains that way.

Let me begin with the subject that is uppermost in everybody’s mind – Brexit.

It’s clear from our soundings last week that while Parliament has voted against the PM’s deal…

…it has not yet formed a clear view of what it is in favour of.

Next week, we will see various interventions by backbenchers.

Some of which will attempt to create a mechanism for Parliament to express its view of the way forward.

And in the meantime the government will continue to pursue a negotiated settlement that is likely to be acceptable to Parliament.

And believe me, I understand the perplexity with which many of you, as business leaders, view the politics of Brexit.

And I feel your frustration at the process and I have to say I share much of it!

But politics doesn’t work like business.

And while I am pretty clear what all my business interlocutors are seeking is an economic fix…

…I want to explain to you this afternoon why we need to get the politics, as well as the economics, of this process right.

Because even from the narrowest interpretation of business interest, it would be a Pyrrhic victory indeed to deliver a Brexit that appeared to meet the needs of the economy…

…but which shattered the broad consensus behind our country’s political and economic system.

In the 2016 referendum a promise was made to the majority who voted for Brexit – that they were voting for a more prosperous future.

Not leaving would be seen as a betrayal of that referendum decision.

But leaving without a deal would undermine our future prosperity, and would equally represent a betrayal of the promises that were made.

And that is why I, having campaigned vigorously to remain, in the referendum have come to believe that the only credible and sustainable solution is for us to leave the European Union.

To honour the referendum decision but to do so in a way that protects our economy in order to allow us to deliver that future prosperity that those voters were promised when they voted to leave the EU.

The only sustainable solution is a negotiated settlement with the EU:

A deal that supports the economy, protects jobs and allows us to continue a close trading partnership with our European neighbours.

Now to do that right now, we need to find a way around the impasse over the backstop.

And if we are to do so, it will take ingenuity and flexibility on the part of the EU.

As well as a spirit of compromise on the part of some of my colleagues.

It is surely in our national interest, all of us, to preserve faith in the political system and the democratic process…

…as well as protecting our economy as we leave this process…

…Surely in our interest to move forward to agree a negotiated Brexit that is a compromise that can begin to heal the nation and heal both political parties.

Failure to do so could lead to instability, populism (political content removed).

I know that for many business leaders…

…right up there alongside the question of access to European markets…

…is the question of access to labour.

Openness to global talent is a fundamental feature of the UK economy.

Migrants have made a huge contribution to our country over our history – and they will continue to do so in the future.

But at the same time, one of the messages that almost all politicians divine from the Referendum result…

…is a concern about our ability to control European Union migration: less, I personally think, about absolute numbers and more about a sense we have lost control of our own borders.

And so we have to be clear that as we leave the European Union, free movement will end…

…although I can assure you that short-term mobility for both business and leisure will continue.

And the immigration white paper, published in December, offers a pragmatic way forward.

First, while it constructs a universal framework for future migration control, it does not rule out the possibility that future trade deals – including with the EU – might make provision in this area.

Second, it proposes a skills-based immigration system – where it is workers’ skills that matter, not which country they come from.

And third, we have announced an extensive consultation into where the threshold for the highly skilled tier should be set…

…and how we should deal with the challenge presented by the economies need for intermediate-skilled workers:

The technicians; the carers; the chefs, the construction workers and the myriad others whose skills we badly need – but who often earn less than £30,000.

Business should be hugely reassured by this commitment to engagement.

And particularly to a twelve-month consultation period.

So, while free movement is ending, the detail of what will replace it remains to be decided.

And business has a real opportunity to help shape the policy.

But if I may say so, it will only do so if it engages effectively and presents a clear consensus from the business community.

So I urge you, collectively, to seize the opportunity to engage with this consultation…

…and to bring forward constructive, consistent and evidence-based proposals.

Let’s work together to design a system that responds to public concerns about immigration…

…but also protects our economy and our businesses…

…and becomes a part of the UK’s competitive advantage for the future.

While negotiating Brexit it must of course be the immediate priority, we must also deliver a message to the British people and to our trading and investment partners, about Britain’s future, beyond Brexit.

And it is a future based on a fundamentally strong economy.

One that has grown continuously for the past eight years…

…with employment breaking records again just this week…

…and wages now thankfully rising significantly faster than inflation.

The world’s fifth largest economy, ranked the 8th most competitive by the WEF…

…which between 2015 and 2018, attracted more Foreign Direct Investment than any other EU nation, and more than France and Germany combined.

These achievements are not an accident.

They are the result of a deliberate economic strategy by this government:

…to deal with the deficit so that debt is now falling…

…to cut taxes on the wages people earn…

…and on the businesses that employ them…

…and deliver an Industrial Strategy, that is tackling the productivity challenge head on to sustainably improve our competitiveness, and hence the living standards of our people.

We are driving investment through initiatives like the National Productivity Investment Fund…

…the biggest sustained programme of public sector investment since the 1970s…

…and our commitment to 2.4% of GDP as R&D spending.

I am not, for one moment, complacent about our economic performance…

…especially as we see increased risks in the global economy, and lower forecasts for global growth…

…and I certainly recognise that continued Brexit uncertainty is taking a toll.

But that should not obscure the strong foundations we have built for the future…

…foundations that will ensure our economy grows and prospers, whatever the future has in store for us.

That prosperity will be sustained by a deep and enduring commitment to free and open markets, to intelligent and appropriate regulation, and to a globally competitive tax system.

We know that the free market is the only way to deliver the high-wage, high-skill economy of the future.

And that Free Trade is the way to spread prosperity globally.

(And by the way, the quickest way to boost global growth right now would be to liberalise trade in services).

But we also know that to maintain public trust in the free market, we must make sure that the rules of the game evolve to keep pace with the changing nature of the economy…

…especially when there are populists waiting in the wings to propose radical – and dangerous – so called “solutions” in response to every perceived failure.

For example, it is clearly not sustainable or fair that global digital platform companies can generate substantial value in the UK, without paying UK tax on their earnings.

That’s why the UK has been leading attempts to deliver international corporate tax reform for the digital age.

But pending that global agreement, we have introduced a UK Digital Services Tax…

…to make sure that global tech giants, with profitable businesses in the UK, pay their fair share towards supporting our public services.

And now the French have followed us – with a tax broader in scope and with higher rates.

We are also conducting an external Review of competition policy in the digital economy…

…to examine the impacts of the emergence of a small number of dominant players in digital markets…

…and how we can ensure that competition plays its proper role in driving business innovation and expanding consumer choice…

…so that the economy as a whole benefits from new technologies.

These initiatives show our determination to remain at the cutting-edge of these policy debates – and of regulatory solutions.

Demonstrating in deeds, not just words, our commitment to build a digital economy that works for everyone.

I spoke to you last year about the opportunities of the fourth industrial revolution:

About how technological advances will lead to a revolution in the way we live and work…

…with Artificial Intelligence transforming everything from factories to hospitals…

…and in turn boosting our productivity and our living standards.

But I also spoke about the challenges that this revolution represents…

…and how they link to some of the concerns that drove the Brexit vote.

About the need to address fears that automation and new technology may bring, not higher wages, but mass unemployment…

…and that as new technology drives greater productivity improvements, the returns may flow to capital, rather than labour.

In Britain, we are taking these concerns seriously.

We are providing investment of course to build on the UK’s position as a world-leader in innovation and new technology:

We have announced £1.6 billion funding in science and innovation and £950 million in our Artificial Intelligence sector deal…

…and £50 million for the new Turing Artificial Intelligence Fellowships, which will attract and retain the best researchers from around the world.

But we can and must go further.

Artificial intelligence could add $15.7 trillion to the global economy by 2030.

But only countries with the most advanced digital skills will fully realise these benefits. And we intend that Britain will be at the front of that cohort.

So I can announce today that in addition to the Turing AI fellowships…

…we will commit £100 million to establish 1,000 new PhD places in centres across the UK…

…to create the next generation of AI innovators and build on the established research excellence of Britain’s universities.

The potential prizes of the 4th industrial revolution are great, but we can only seize them if we can take our public with us.

So we are also taking action to manage the impact of technological change on Britain’s society and economy…

…by investing in programmes like the National Retraining Scheme – which we are delivering in partnership with the CBI and the TUC – to provide employers with the skills they need as the economy evolves…

…and to reassure workers that they won’t be abandoned when the technological revolution reaches their job.

And the new ‘T Levels’, which will also – admittedly decades too late – import into the UK’s technical education system important lessons from Germany, Scandinavia and the US.

And Britain is also leading the debate on the ethical challenges of the Fourth Industrial Revolution.

With the establishment of the Centre for Data Ethics and Innovation…

…and through the Regulators’ Pioneer Fund, we are leveraging Britain’s track record of regulatory innovation to deliver a competitive advantage for our future economy.

So in conclusion the future of Britain’s economy clearly depends on making a success of Brexit.

But that is a necessary, not a sufficient condition for a prosperous future.

If we look up for a moment from the immediate challenge of Brexit, we can see profound change ahead – and enormous opportunity.

And Britain is leading the way into this future.

Investing in new technologies…

…promoting, not abandoning our commitment to free and open markets…

…taking action to manage the impact of profound technological change…

… building on our strong economic foundations.

And, when the economic history of the first half of the 21st century comes to be written, it will not be about Brexit.

It will be about a technological revolution of a speed and impact the like of which the world had never seen before…

…a revolution that touched every aspect of our society, our economy, and our politics…

…and if we get it right, it will be the story of how we in the UK leveraged our historic strengths to manage this change…

…and to place Britain at the forefront of it…

…as a nation ready for the future…

… a great place to do business.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 11 December 2018.

Thank you Constantin, it’s great to be here.

And it’s great to get out of Whitehall, to the wonderful surroundings of Bloomberg’s new European HQ.

This HQ is a great representation of this City.

Historic and modern, nestling side-by-side…

…a technological and architectural temple of gadgetry…

…on the site of the 3rd Century temple to the god Mithras.

Back then during the very origins of Londonium – this Mithraeum played host to merchants, traders, and imperial administrators in the depths below where we stand now, plotting the future of this great city…

…and 1,800 years later – we’re still bringing together investors and regulators to discuss what the future holds for the global economy.

This stunning building won this year’s Stirling prize for the UK’s best new building…

…fighting off competition from a brick nursery and a mud-walled cemetery.

And I’m delighted to be here today – in the home of a global company that represents the very best of this city…

…a business that over the past 40 years…

…thanks to the entrepreneurial spirit and vision of Mike Bloomberg…

…has grown from a seller of the iconic Bloomberg terminals we all know well…

…to a global information, data, and media empire, and the very heart of what makes financial markets tick.

And this is a good time for us to meet and take stock…

…at a time of uncertainty and challenge for the global economy:

Rising US-China trade tensions…

…a slowing outlook for global growth…

…the challenge of the impact of monetary policy normalisation on the Emerging Markets…

…economic challenges facing major economies, from Japan to Italy…

…and a reminder last week in France – of the threat posed by a rising tide of sentiment among our electorates that our economic model is not working for everyone.

And of course – here in the UK – we have our own special problems as we navigate our Exit from the EU.

We have agreed a deal with our EU partners that ensures a smooth and orderly departure from the European Union…

…delivers on the referendum decision of the British people…

…and secures a close future economic relationship with our nearest neighbours.

It is the best deal available for the British economy that delivers on the result of the referendum…

…and it’s a deal that can bring this country back together again and allow us to all move on.

And it’s a deal that protects the UK’s position as a global financial centre…

…and allows the hugely mutually beneficial financial services trade with the EU to continue to flourish.

Not through the EU’s ‘passporting’ regime – as we will leave the Single Market…

…but through a new economic and regulatory partnership in financial services.

We have set out a proposed framework for how this will work…

…allowing the mutual benefits of UK-EU financial services trade to continue – while protecting financial stability, businesses, consumers, and taxpayers across the UK and the EU.

And the deal agreed with the EU includes an agreement on the future relationship for financial services that reflects these proposals…

…with both sides committing to take decisions on granting equivalence at least six months before the end of the Implementation Period.

But I don’t want to spend my time with you talking about Brexit…

…I’ve done more than enough of that over the last few days, and months…

…and at this conference you are gathered here to talk about the opportunities and challenges in the global economy…

…and I want to say a few words about our plan for Britain – post-Brexit – to remain an international centre of finance and commerce around the world.

The UK has always had an internationalist outlook – and we’ve been a global centre of finance for centuries…

…for it wasn’t the passport that built the City of London…

…it was our unique history and networks…

…supported by a few specific advantages:

Our language is the global language of business;

Our legal system is the jurisdiction of choice for international commerce;

Our world-class universities and schools contribute to the pluriculture that makes the UK such a favoured place to live and work;

Our tech sector is the innovation leader in Europe;

And we are the global capital for international finance and professional services;

And the key point – is that Britain’s strengths are more than just the aggregation of these things…

…it is the effect of bringing them together…

…the financial capital of the world…

…a global innovation hub, research centres of excellence, a leader in creative industries, and a vibrant and diverse culture…

…that together create this ecosystem of prosperity.

And post-Brexit I am clear that we will maintain and build upon this ecosystem…

…as we shape our economy for the future.

And since this is a Global Regulatory summit let me say a few words about standards…

…because one thing that will stand regardless of our future relationship with the EU, is the UK’s commitment to robust international standards.

We led the way internationally in the development of post-crisis financial reforms…

…and ten years on our global system stands safer, simpler, and fairer:

Safer because large banks are better capitalised, less leveraged, and more liquid;

Simpler because over-the-counter derivative markets are less complex, and more transparent;

Fairer because we’ve reformed the resolvability of financial institutions – so that now it is shareholders and creditors who bear the costs of a failure – not taxpayers.

And it’s precisely because we have such a large, dynamic, important financial sector – that it is in our interests to go beyond international baseline standards…

…and drive forward the global ‘race to the top’.

And as people in this room know – this job is never done.

We need to do even more if we are to complete the global regulatory reform agenda…

…and in particular we must look at how the implementation of these reforms may impact on the market…

…and how differences in timing or consistency of implementation could lead to market fragmentation…

…and in turn lead to weaker resilience, unlevel playing fields, increased costs of transactions, and financial stability risks.

I’m glad that Japan has indicated it will take forward work on this agenda during their forthcoming G20 presidency…

…and the UK stands ready to support this work – for the benefit of our financial sector here at home, and for the resilience of the global financial system as a whole.

Because I reject the idea that laxer regulation makes a jurisdiction more attractive.

But regulatory systems will be a key discriminator:

The financial centres of choice in the future will be safe, transparent, stable, and predictable…

…with appropriate regulatory regimes…

…that are agile and flexible to keep abreast of changing technologies and business models.

Regulatory robustness, coupled with regulatory agility, and a commitment to regulatory innovation will be a key selling point of London’s financial services market in the future.

However, London’s strengths as a financial centre are about more than resilience and our commitment to high quality, agile, and flexible regulation;

It is about being the global centre for international finance…

…and as we leave the EU, we are more focused than ever on strengthening ties with the big, established markets, beyond Europe, from the US to Japan…

…and building new links with the fast-growing markets in the East – including in particular, India and China…

…who – as their middle classes grow in size and prosperity – will rapidly increase their demand for financial services in terms of volume and in terms of sophistication.

So at my Mansion House speech in June – I announced our intention to develop new Global Financial Partnerships…

…to strengthen our links with these key markets around the world….

…leveraging existing tools – such as our bilateral dialogues, and regulatory cooperation…

…with new tools – such as market access agreements, through our future third country regime…

…across capital markets, banking, asset management, and insurance…

…to reinforce the UK’s position as the pre-eminent centre for global finance.

We have worked hard on our Global Financial Partnerships plan and we are gearing up to begin discussions with potential partner countries from April 2019, as soon as we have left the EU.

In conclusion, Britain is, and will remain, a great place to do business.

Of that, I have no doubt.

And our financial sector will remain in the vanguard – with a regulatory system that is among the most open, transparent, and agile in the world – adapting, innovating, driving change, influencing…

…and as Chancellor I am determined to go on pushing us to do even better… …to develop new products and services… …to reach out to new markets… …and to rise to the opportunities and challenges ahead.

I have spent the last two years on a path of unswerving commitment to a Brexit deal that protects jobs, businesses, investment, and growth;

So that we can go on investing in the technologies and skills of the future;

And secure our place as the world’s leading financial centre in the years and decades to come.

I remain committed to that cause…

…I am grateful for the huge support from the Financial Services industry…

…and look forward to continuing to work with you as we deliver Brexit…

…manage the transition smoothly…

…and go on to reinforce the global network that will underpin London’s position in the future.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 24 May 2018.

Thank you for inviting me to speak at this conference, and to address this distinguished group this afternoon.

It’s apt that I speak today on the anniversary of another momentous event for European unity and shared values.

Sixty-two years ago today – as a war-torn Europe rebuilt itself – countries across our continent came together to form a positive vision of a tolerant, free Europe…

…where talent and hard work was recognised…

…and established a new pan-European partnership.

I am not speaking about the Treaty of Rome, or the formation of the European Economic Community…

…but of the first Eurovision Song Contest.

And I can tell you that today, the Eurovision Song Contest is one of the very few issues that generates as much debate and strength of feeling in the UK as the European Union itself does.

But we all take part in it…

…and we all accept the rules of it. Even when we lose.

And today, I want to reflect on the enduring shared values of our continent…

…and on the shared opportunities, and the shared challenges that lie ahead.

And this summit…

…bringing together leaders from both government and businesses…

…comes at an important time for our continent:

Because while the global and European economies have recently enjoyed a period of relative strength…

…we cannot take this for granted…

And the geopolitical context is increasingly uncertain…

…whether it’s the presence of an emboldened and re-arming Russia on Europe’s eastern doorstep…

…the ongoing escalation in tensions across the Middle-East…

…or uncertainty around the policy of Europe’s largest trading partner, the US, on trade and tax reform.

And governments across Europe…

…and indeed around the world…

…are having to manage a rising tide of sentiment among our electorates, against the conventional wisdom of free trade, globalisation, and the benefits of the liberal market economy…

…an argument that as leaders in government and business we must make all over again;

These are challenges that face all of us across this continent…

…challenges we must confront if we are to deliver the security, prosperity and higher living standards for our citizens for which we all strive.

But my message this afternoon is that there are significant shared opportunities too…

One such opportunity that I spend a lot of time talking about, is presented by the coming technological revolution…

…a revolution that will shape people’s lives and have far-reaching implications for our economic model…

…and will have a long-term impact on all our economies, far bigger in scale than the United Kingdom’s decision to leave the European Union.

Of course, such profound change brings with it major challenges…

…such as evolving our tax and regulatory systems…

…our competition policies, so they are fit for…

…for the digital age…

ensuring that our people have the skills they need to prosper in a world of increasing automation;

and convincing them that everyone can share in the proceeds of this technological change and the economic growth that can flow from it….

At a time of unprecedented scepticism of our liberal market economic and political model…

That requires collaboration and cooperation.

And if we want European values and interests to prevail in this debate we must ensure that Europe speaks with one voice.

Of course, as Chancellor of the Exchequer of the United Kingdom, my most immediate priority is our negotiation with the EU…

…but the point is, that the challenges and opportunities facing our economies and societies are shared challenges and common opportunities…

…And our shared values and shared history….

…go back far beyond our membership of the European Union…

…or even Eurovision…

…and they will continue far beyond the timeframe of Brexit.

And our continent’s shared commitment to economic openness, democratic values and human rights…

….and our shared belief in the power of the liberal market economy to deliver rising living standards for all of our people…

…remains unshakable.

With our different history, culture, and outlook, the British people decided that the deep political integration to which the EU institutions increasingly aspire, was simply not right for Britain…

…but the British people have not, and never will, turn their backs on free, open and fair trade with our European neighbours. That is an established part of our economic culture – going back to Hanseatic times and earlier.

Britain is leaving the political institutions of the EU; but it is not leaving Europe

And British prosperity is, and always will be, closely bound to European prosperity.

So Europe’s success – and the success of the Euro as a currency – is very strongly in Britain’s interest, and we will not do anything which jeopardises that success.

Our economy is recognisably a European-style economy…

…with high levels of consumer and worker protection, a highly developed social welfare system and strong environmental standards…

…and it is the clear wish of the British people, regularly demonstrated, to keep it that way…

…as we build a new deep and special partnership with the European Union.

We have made significant progress since Article 50 was triggered, just over a year ago…

…both in our own internal debate about what Brexit should mean…

…and in our negotiation with the EU.

The first stage in the negotiations successfully settled many withdrawal issues, including the UK’s financial obligations, in December.

And in March we reached agreement on a transition period, running until the end of 2020…

… during which businesses can operate exactly as before…

…ensuring only one set of changes, at the end of that period, that businesses have to navigate.

We are now focussed on our future customs relationship, and our future economic partnership, and I’ll briefly say a bit about both.

I know that for business getting clarity on our future customs relationship is a top priority…

…and so it should be a top priority for European governments too.

EU27 businesses export more services to the UK than to any country outside the EU.

Almost 80% of Irish poultry exports go to the UK…

…one eighth of German automotive exports…

…10% of all French cheese exports.

And here in Belgium, almost half of the total tonnage handled at the port of Zeebrugge last year, went to, or came from, the UK – up from just a third in 2011.

Over 1 million cars were transported between Europe and the UK via Zeebrugge…

…up 80% on seven years ago.

The UK is exploring two possible future customs models…

…both are “works in progress” with more work to be done…

…but we are confident that, building on the work we have done already on these models…

…we can develop a solution that responds to the concerns of business…

…minimises frictions and burdens at and behind the border…

…avoids new barriers in Ireland…

…and sustains our trade with the EU27.

And beyond customs, we seek a comprehensive future economic partnership …

…a partnership that protects the supply chains and established trade relationships that I have just talked about…

… safeguards the jobs and businesses that depend on them on both sides of the Channel…

…and promotes the values we share across the continent of Europe.

And of course, in doing so, we don’t have to start from scratch.

The UK and EU27 are in a unique positon:

…with deeply interconnected economies and supply chains…

…a starting point of common regulatory standards and regimes…

…and unrivalled collaboration in everything from trade, security and defence…

…to people to people exchange, education, science, technology, culture and many other shared areas.

There are a range of possibilities for the shape that our future relationship could take…

…and those of you who follow UK media, as I know many of you do, will recognise there is a range of views in the UK about those options.

And we will set out in the coming weeks more detail on the British Government’s ambition for a mutually beneficial future relationship between the EU and the UK…

…in the context of our vision for the UK’s future role in the world.

For example, we’ll seek a comprehensive system of mutual recognition to ensure that, as now, products only need to undergo approvals in one country to show that they meet regulatory standards across Europe;

We’ll explore the terms on which the UK could maintain a continuing relationship with EU agencies, such as those for chemicals, pharmaceuticals, and aerospace, so that they continue to benefit from UK expertise and we can deliver such a system of single approvals;

On services we have the opportunity to establish a broader agreement than has ever been done before, including continued recognition of professional qualifications, and a labour mobility framework that enables travel to provide services to clients in person.

We seek a bespoke partnership in financial services, that will enable the ongoing delivery of cross-border financial services in both directions, while protecting financial stability and maintaining fair competition.

I believe it is very much in our mutual interest to maintain access to London’s financial services market for Europe’s business and citizens.

We manage in the UK more than EUR1.5 trillion of assets on behalf of EU clients;

Around two-thirds of debt and equity capital raised by EU corporates is facilitated by banks based in the UK. 78% of European Forex trading and 74% of European interest rate derivatives trading takes place in the UK. These are services that businesses rely on to run their operations efficiently, with the benefit passed on as lower prices for consumers in all 28 EU countries…

…and more competitive exports to the rest of the world.

And we should be under no illusion about the significant additional costs if this highly efficient market in London were to fragment.

Costs that would be borne by Europe’s businesses and consumers.

And more prosaically, while we are working through the spectrum of issues in relation to our future relationship…

…we are also making progress with the introduction, application and transformation of the many technical systems and processes that underpin the trade relationship between the UK and EU so that we are ready for exit whatever our future relationship.

But reaching a vision of a deep and comprehensive future relationship will only be possible if both sides want it.

A deal only works if it works for both parties as we say: “it takes two to tango”.

And I am saying this to you this afternoon, because I fear that many EU opinion-formers in government and in business, see the Brexit challenge as simply one for the UK to resolve.

And I understand the temptation to say “let the brit’s sort out what they want – and then come back to us”.

But this has to be a two-way conversation.

Because the final deal won’t be determined simply by what Britain wants…

…it can’t be just about British prosperity and British jobs…

…it must also be about European prosperity and jobs.

And if EU27 Member States don’t want to have a close future economic, security, technical relationship with the UK…

…then it won’t happen.

So we need a frank conversation about our shared appetite for such a future close partnership.

Do we both want it? Or don’t we?

If we do, let’s focus on making a deal that works.

Personally, I passionately believe that all of us in this room, and across Europe, should be interested in an outcome that properly reflects the 45 years that we have spent together as members of the EU…

…that reflects our shared history and shared values…

…and looks forward to the challenges and the opportunities, which we will face so much more effectively by working together.

There is no denying that there are a range of complex issues to resolve…

…but I believe that with the political benefits articulated by the Member States; with the economic logic, articulated by the voice of business…

…we can make the case for a close future partnership – the UK, the EU; governments and businesses…

…working in the common interests of all of our citizens.

Ensuring Europe’s voice in the world…

…a strong voice for the values that reflect the lessons of our Continent’s long and turbulent history…

…at a time when others sometimes appear tempted to forget those lessons…

…to step away from those values.

So let us resolve today to work together to ensure that all of Europe remains an open, outward looking free-trading Continent…

…attracting talent and capital from around the world.

Let us build a future partnership that we can be proud of…

…one that will stand the test of time

…and that will support the prosperity, security and living standards of our children, and our children’s children.

The voice of business a decisive influence as we take this debate forward…

…and I look forward to the common sense, pragmatism and economic logic of business playing a crucial role as we shape our future relationship

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 22 May 2018.

Thank you, Paul.

And let me join you in commemorating those who lost their lives and those who were injured during the appalling attack in Manchester, a year ago today…

…our thoughts this evening are with the families and friends of those affected.

As ever it’s a pleasure to speak to you tonight.

And what a week it has been.

The Royal Wedding; the FA Cup Final; and now the CBI dinner!

And I’m especially pleased to be here this evening to mark the end of Paul’s three-year tenure at the helm.

I was doing a little research and stumbled across an FT interview with Paul in 2011.

When asked “which historical or fictional character do you most identify with?”, Paul replied, with characteristic modesty: “Nelson Mandela”.

History will determine!

Paul, congratulations on the achievements of your Presidency, and thank you for the leadership you have shown.

It was Nelson Mandela, reflecting on his first 100 days as President, who noted that “on occasion, strong language has been used to drive home a strongly held belief”…

…and he reassured his audience that this was a sign of “a robust, vibrant democracy, with broad consensus on the most important national questions”.

Paul, I will welcome your speech tonight as a sign of our “robust, vibrant democracy”!

Because we are in broad agreement on the big questions facing our country and our economy.

We agree that:

We must rebuild a consensus for the liberal market economy as the best way to deliver future prosperity.

We must embrace digital technology, and ensure Britain is at the forefront of the technological revolution.

We must invest in skills and training – to ensure the next generation is prepared for the economy of the future.

We must build the world class infrastructure and invest in the R&D needed to ensure Britain stays ahead in the global race.

We must raise our productivity – and thus deliver higher wages for people up and down this country.

And yes, we must deliver a Brexit that prioritises jobs, growth, and prosperity.

And it is absolutely my belief that central to all of this, is listening to business, and believing in the power of business to deliver higher living standards, and spread greater prosperity.

I can promise you, Paul, business advice is a welcome input, not an “inconvenient truth”!

So I hear the concerns you have set out tonight about the Brexit challenge…

…but I remain confident. And, by the way, when Donald Tusk says Brexit is the “saddest moment in Modern European history”…

…I assume he didn’t see this year’s Eurovision.

The PM has always had a vision for a close economic partnership between the UK and the EU…

…a partnership that protects supply chains, and established trade relationships…

…that backs businesses, and safeguards jobs…

…and that promotes the values that we share across the continent of Europe.

We have made good progress:

In March we agreed on an implementation period…

…which allows “business as usual”…

…and ensures you only have to navigate one set of changes.

Focus has now moved on to our future economic partnership, and in particular the customs relationship.

I have listened to the four customs tests you have set out tonight…

…and we share your aspirations to minimise frictions and burdens…

…to avoid new barriers in Ireland…

…and to grow British exports.

But we do not agree that staying in the customs union is necessary to deliver them.

The UK has proposed two possible future customs models…

…both are “works in progress”…

…but we are confident that, building on these two models, we can develop a solution that will allow us to move forward while meeting your concerns, Paul.

And beyond customs, we will seek a comprehensive system of mutual recognition to ensure that, as now, products only need to undergo approvals in one country to show that they meet regulatory standards across Europe…

…and we will explore the terms on which the UK could maintain a relationship with the EU agencies, such as those for the chemicals, pharmaceutical, and aerospace industries…

…as the route to deliver such an outcome.

On services, we have the opportunity to establish a broader agreement than ever before…

…including continued recognition of professional qualifications, and a labour mobility framework that enables travel to provide services to clients in person.

And an opportunity to seek a bespoke partnership in financial services…

…that will enable the ongoing delivery of cross-border financial services in both directions, while protecting financial stability and maintaining fair competition.

We made good progress in December and March, and I hope and expect we will make further progress at the upcoming June Council.

It is in the interests of both the UK and the EU to secure a mutually beneficial deal that will allow us to continue to have a close economic partnership…

…and to do so as soon as possible to give businesses the certainty they need.

I am confident that we will reach such a deal.

That is my most immediate priority as Chancellor.

But as we embark on a technological revolution that will transform our economy and our lives…

…my most important long-term challenge is to ensure that the UK continues to be at the forefront of that technological revolution, leading the world in innovation.

This is what our Modern Industrial Strategy is all about.

It isn’t about picking winners…

…or propping up failed industries.

But about exploiting the synergy between the facilitating power of the state…

…and the energy of the private sector…

…to deliver the innovation that will secure Britain’s future…

…within a market that is working properly and fairly.

Supporting entrepreneurship to ensure the industries of the future get off the ground…

…investing in research and development…

…ensuring that start-ups can access the finance they need to become “scale-ups”…

…and, most importantly, creating an environment where innovation can flourish.

And we’re putting our money where our mouth is…

…we’ve committed to the largest increase in public R&D spending in three decades, as part of our ambition to raise R&D investment across the economy to 2.4% of GDP.

We’re investing £640 million of public money in artificial intelligence and over £1.7 billion in autonomous and ultra-low emission vehicles…

…and in the Budget last Autumn I launched a plan to unlock over £20 billion of patient capital, for the UK’s most innovative firms to grow to scale.

But we won’t be able to put the UK at the front of the pack unless we have infrastructure that is fit for the future.

And that is why infrastructure is at the heart of our plan.

In the 18th century, it was canals;

In the 19th, it was the railways, and in the 20th the arterial roads and then the motorways.

In the 21st century, fibre networks will be the enabling infrastructure that drives economic growth.

We’ve already connected more than 95% of the UK to superfast broadband.

But we must now take the next big leap forward.

Full-fibre networks are faster, more reliable, and cheaper to operate than their copper predecessors.

Over a million premises already have direct access to them…

…70% of those connected in the last 18 months alone.

But if we are to achieve our ambition of a truly high-speed economy, and keep up with our competitors, then we need a step change in our approach.

So I am now setting a new target to see full-fibre to the premises connections being available to 15 million premises, that’s the majority of homes and businesses, by 2025.

This is ambitious…

…and it will require industry to connect more than 2 million additional premises a year for the next seven years.

We won’t do that by government diktat.

We will do it by creating the conditions for the market to deliver…

…and we will use all the tools at the government’s disposal to ensure that target is met…

…and we’ll go further, by committing to finish the job – and deliver a nationwide full-fibre to the premises network by 2033.

Running both copper and fibre networks indefinitely will not benefit either the consumer or the industry…

…so we must start thinking now about that switchover and how to sharpen the incentives for industry to move customers away from copper and on to fibre.

And Matt Hancock, the DCMS Secretary, will set out our strategy to deliver these ambitious targets in the Future Telecoms Infrastructure Review, later this Summer.

The talent of the future.

The digital industrial revolution and Artificial Intelligence will bring about a step-change in automation.

This, in turn, will have profound implications for jobs, and the way we work.

And if we want our people to embrace the digital economy, we must support them when they are affected by automation…

…and help them train and retrain into the new high quality jobs of the future.

Because just as the assembly line allowed Ford to triple the number of cars produced per worker…

…cut the price of a car in half…

…and increase employment eleven-fold…

So the digital industrial revolution will also create millions of new jobs, and huge increases in living standards…

…but that will not reassure those whose current jobs will be displaced.

So, between us in government and business we have a vital role in managing this transition;

In investing in skills and retraining;

In providing the reassurance our workforce will need.

We have made a start.

Through the Apprenticeship Levy, we are increasing the quality of apprenticeships, and the capacity of the system.

We’ve already seen a 25% increase in higher level apprenticeship starts.

But I recognise the new levy system presents some challenges…

…and we’re listening to your concerns around flexibility, and will keep that issue under review to make sure the levy works as intended.

We’re investing over £500 million a year in our new T-Level technical qualifications…

…and with the help of the CBI and the TUC we are establishing a new National Retraining Scheme…

…to help adults faced with the consequences of technological change to re-train throughout their working lives.

It’s a groundbreaking collaboration and I’m delighted we were able to make it happen through the leadership of Paul and others here tonight.

But government cannot solve our nation’s productivity challenge on its own.

Because it is not only about infrastructure and skills…

It is also about management.

Britain of course has many world-leading companies with globally competitive productivity…

…but there are also far too many that could be doing a lot better.

Tomorrow I will publish a call for evidence into why some businesses aren’t keeping up and don’t learn from the best…

…seeking ideas for how government and industry can work together to help more firms realise their potential by taking best practice.

And in parallel with the call for evidence I will announce with Greg Clark, the Business Secretary, further steps to boost firm-level productivity.

We’ll invest £5.6 million to support smaller firms to adapt modern management practices and simple digital technologies, through two new pilot programmes delivered by Charlie Mayfield’s Be the Business.

And we’re extending our backing for the Made Smarter Digital Manufacturing strategy…

…led by Juergen Maier – and supported by the CBI.

Made Smarter will help to maintain our position as a global leader in the digital revolution…

…and so we’ll provide £20 million for a pilot in the North West, to support SME manufacturers to adopt industrial digital technologies, such as robotics and data analytics.

Before I close, I want to touch on one further, important issue.

I have talked about the big opportunities ahead;

But there will be big challenges too – and challenges that go beyond the mere uptake of technology…

…to pose questions about economic governance and the organisation of society in the 21st century digital economy.

For those of us who believe in the demonstrated power of liberal market economics to deliver both prosperity and political freedom…

…this is a question about how this most resilient of economic models transforms itself in response to the challenges of technological and societal change…

…as it has done so many times before.

For people of my generation – and looking around the room at many – though not all – of you, I see people who I think are of my generation…

…congratulations that you can still get out of an evening!

For people like us, who lived through the 1970s, the economic model [political content removed] is not a text book theory, but a vivid memory.

And for people in a small number of countries around the globe, it is a miserable reality today.

But not everyone in our society has shared that experience.

And some of a younger generation will be tempted by ideas that sound radical; maybe even “new” (even though they are rooted in a book written in the 1860s).

…because they do not feel the system is working for them.

Many of them have started their working lives at a difficult time for our country…

…emerging into the workforce as the financial crisis and its aftermath shook our system…

…and enduring a decade of recovery from it.

They look at their parents’ and their grandparents’ generations…

…at the home ownership levels, the defined benefit pensions, the traditional jobs…

…and they ask who or what decreed that so many of the things that previous generations took for granted, should be so much harder for them to obtain.

They are not looking for a hand-out…

…but they are looking for a reassurance that hard work will allow them, too, to achieve their aspirations for a better life for their kids.

And as we look forward to, and prepare for, the transformational impact that technology will have on our economy and our society…

…we must answer their challenge.

We must articulate how we will refresh our economic model to respond to technological change…

…in competition policy…

…in taxation policy…

…in ensuring an equitable distribution of the proceeds of growth as we manage the impact of smart automation and artificial intelligence on the world of work…

…so that it speaks to their values…

…addresses their concerns…

…and unlocks the door to the achievement of their aspirations…

…with solutions, which are framed not by the stale ideologies of the past, but by the exciting potential of our future.

Solutions that build on, not undermine, the liberal market economy that is the bedrock, not only of our prosperity…

…but of our freedom too.

I have spoken tonight of our strategy for negotiating Brexit…

…and of our vision for post-Brexit Britain.

It is a vision of an open, dynamic, evolving, market economy…

Of a Britain whose firms are at the cutting edge of technology and innovation.

A Britain with infrastructure fit for the future…

…and workers equipped with the skills they need for the challenges that lie ahead.

A Britain where government and business work together to realise the potential of unlocking Britain’s productivity puzzle…

…to deliver an economy that works for everyone.

That is our vision of the prize that lies within our grasp.

And I know we can count on British business to work with us to deliver it for the British people.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, at the Heads of Government Meeting in London on 17 April 2018.

Lord Mayor, Excellencies, Ladies and Gentlemen.

It gives me great pleasure to welcome our visitors to London, for the Commonwealth Heads of Government Meeting 2018.

The biggest meeting of Heads of Government, of any kind, that the UK has ever hosted.

From the Pacific Islands, to the British Isles, from the Caribbean to Central Africa, the Commonwealth is a community which spans the reach of global geography.

And the entire breadth of the economic spectrum.

A community united in its vast diversity, by a common heritage, and shared values of democracy and human rights.

Tomorrow, I will chair a roundtable of heads of government and senior business leaders to reflect on key themes of this year’s summit.

From boosting intra-Commonwealth trade, spreading inclusive growth, and how we can build upon our ‘Commonwealth Advantage’.

That is, using our common language, institutions, trade ties, legal systems and values, for the common good of all our citizens.

Because the fact is that together we have the capacity to do enormous good, and spread significant prosperity.

We, the Commonwealth, represent a third of the global population.

Half of the world’s top 20 emerging cities.

And 60% of our population is under the age of 30.

And the common-wealth is just that.

Our commonalities mean as members we trade 20% more.

Generate 10% more foreign direct investment.

And enjoy costs of trade around 19% lower by comparison with non-Commonwealth relationships.

And over seven decades we have used these deep ties to help newly independent countries develop their national institutions, make economic progress, and share common experiences with one another.

But we cannot simply sit back and admire our achievements and past successes.

We must look forward, and the Commonwealth must reform and change in an ever-changing world.

We must continue to make the case for free trade as the best way to promote higher living standards amongst all of our citizens.

And particularly we must look for opportunities to liberalise trade in services.

We must ensure that our growth is inclusive.

And at this Summit we have committed to increase opportunities for women to trade internationally.

And to look at ways that we can tackle youth unemployment.

And that it is sustainable.

And we must prepare to embrace the changes of the technological revolution which is gathering pace around us.

And ensure our economies, and our citizens, are ready to seize the opportunities that that revolution will bring.

For example from FinTech – which has the potential to change the way in which our people and our businesses access financial services.

Whether its cashless transactions between friends.

Or sending remittances to family in other countries.

I recently signed a FinTech Bridge between the UK and Australia.

And we are exploring similar opportunities between the UK and India.

And I hope we can encourage more of these agreements between Commonwealth countries in the years ahead.

Because by working together in the Commonwealth we can be a force for good and for progress around the world.

We can work together on the challenges that we face.

Across the Commonwealth.

Recognising our common values and needs.

To grow our trade links.

Unleash the talents of our populations.

And strive to improve the lives of our 2.4 billion citizens, wherever in the world they live.

We live in a time of extraordinary global change.

The future offers incredible new opportunities, as well as immense new challenges to overcome.

Our countries have dealt with the challenges of the past together.

Now, as a Commonwealth of Nations, we shall win the future together.

Thank you all for being here – and I wish you a productive and inspiring week.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, at the FinTech Conference on 22 March 2018.

Thank you, it’s great to be here for the second year running…

…and to welcome so many brilliant fintech leaders, entrepreneurs and investors from around the world.

When I look around this room I see the great strength of the British fintech community.

A community that is full of countless stories of incredible vision, groundbreaking innovation, and tireless hard work.

One such is the story of Ismail Ahmed.

Ismail began his life in Somaliland, in northern Somalia.

In 1991, civil war engulfed Ismail’s hometown. His family, like so many others, lost everything. They became refugees in Ethiopia.

Ismail eventually made his way to the UK and became an economics student at the University of London.

He worked hard putting himself through university – and even as he was working, he would send money home to his family.

Every few weeks, he would trek across London to visit a money transfer agent, pay an exorbitant fee, and sent a very modest sum of money home.

During this time, Ismail thought a lot about money transfer systems and how to make payments cheaper and more efficient.

And in 2010, he founded a little company you may have heard of, called WorldRemit.

From its base here in London, WorldRemit raised $220m from investors to make sending money abroad as easy as sending an instant message.

Today, millions of people use WorldRemit to transfer money quickly and affordably in more than 140 countries – and Ismail is one of the world’s leading fintech entrepreneurs.

The reason I’m sharing his story isn’t just because he deserves enormous respect or recognition, or because he makes many of us look like terrible underachievers.

It’s because this is a story that exemplifies Britain’s FinTech experience – and a story that is being repeated over and over again across Britain’s fintech industry.

So much so that today, Britain is the global capital of fintech.

Fintech contributes nearly $7 billion to the UK economy each year;

London is home to 17 of the top 50 international fintech firms;

And last year investment in UK fintech more than doubled…

…and UK firms attracted almost four times more funding than Germany…

…and more than France, Ireland and Sweden combined.

And I am pleased to welcome great examples of this success today:

Citi have announced London as the destination for their next Innovation Lab.

Next month NatWest will launch new fintech accelerators in London, Edinburgh, Bristol and Manchester.

Level 39 will soon expand into a 100,000 square foot building in Canary Wharf – making it one of the largest FinTech hubs in the world.

Augmentum have created a £100m fund for fintech investment, here in the UK.

And just last week Estonia’s LHV Bank announced it was opening a UK branch to serve the finch industry – a great sign of confidence that cross-European collaboration and investment will continue and grow beyond Brexit.

But none this progress can be taken for granted.

The very nature of this industry means that it moves incredibly quickly and is fiercely competitive.

So let me restate my commitment and determination to ensure Britain remains the best place in the world to set up and grow a Fintech business…

…and to continuously build upon our unique strengths to offer the most attractive home for global fintech leaders.

Of course, we’ve been working on these strengths for quite some time.

In 1649, we were the first country to issue permanent banknotes…

…you might say the Bank of England is the original fintech unicorn.

We were the first to lay telegraph cables under the ocean…

…and by connecting France in the 1850s, and then the United States, we built the essential infrastructure for a global financial system.

We had the first ATM in the world, installed in 1967 – two full years before the United States caught up…

…in fairness, I should say they were busy landing on the moon that year…

…but, if you want to get on…

…you have to be able to multi-task.

And while the British inventor, Tim Berners-Lee is rightly credited with unlocking the digital revolution by inventing the World Wide Web…

…it was a much earlier British pioneer who kickstarted the computer age.

In 1823, Charles Babbage asked the then Chancellor of the Exchequer for £1,700 to build his ‘Difference Engine,’…

…the first advanced mechanical computer – apparently sold it to the then Chancellor on the basis that it would cut down on the amount of paperwork officials did.

Mr. Babbage, can I say I’d like that money back.

And while we are at it, his collaborator Ada Lovelace, can probably claim to have pre-empted our Women in Finance initiative by nearly 200 years.

And now, on top of these deep historical foundations…

…we have built the best modern ecosystem in the world for innovation.

We are home to the English language, the global language of business. Our legal system is the jurisdiction of choice for international commerce.

Our world-class universities have pioneered many of the breakthrough discoveries powering today’s digital revolution – with more Nobel Prizes than any country outside the United States.

And British cultural products and talent inspire huge global audiences – as witnessed by the 30 British Oscar nominations this year.

All of that makes London a Fintech-friendly pluriculture.

And when it comes to innovation, Britain is a workshop for the world – the innovation leader for Europe.

We have the greatest tech hub in Europe, Tech City.

We are home to more than a third of all Europe’s billion-dollar tech firms – with a record £8.26 billion invested in UK startups last year.

London is home to more than 250,000 software developers – more than anywhere in Europe – and the UK is Europe’s top destination for tech talent.

Every hour, a new tech business is founded in the UK.

And my ambition is to see that become every half-hour.

And my message to everyone in this room today is that…

…when it comes to building the Fintech companies of the future…

…you need never doubt that you are among friends in Britain.

Our doors will always be open to the innovators and inventors.

And we will keep working to support you – and ensure Britain remains the best place in the world for fintech.

First, we are committed to building the most pro-growth and pro-innovation regulatory environment in the world for fintech.

We’ve introduced new rules on open banking….

…and I’m delighted to see products here today made possible by this initiative.

We legislated to require big banks to share credit information on small and medium-sized businesses…

…helping more entrepreneurs to get the funding they need to grow…

…and helping alternative funders to grow their market presence.

The FCA’s world-leading ‘regulatory sandbox,’ allows firms to test and refine their products with consumers in a safe environment.

And I know it’s a great idea…

…because multiple other countries around the world have already copied it.

But there’s more to do.

So today I’m proud to launch our new strategy for the fintech sector.

As part of which, I’m pleased to announce that the FCA and Bank of England will take the first steps towards automating regulatory compliance…

…reducing costs for financial services firms, and removing a key barrier for fintechs as they enter financial services markets.

A new code of industry standards will make it easier and cheaper for fintechs to partner with established financial service providers…

…both boosting the ability of banks to offer new services, and helping fintechs to find a ready market for their products.

And we’re appointing new envoys to England, Wales and Northern Ireland to promote the adoption of fintech by regional banks and building societies, complementing the work of the existing Scottish envoys.

Secondly, we’re driving our global collaboration in fintech.

Before today we had signed four FinTech Bridges with Singapore, China, Korea, and Hong Kong…

…committing governments and regulators to collaborate on supporting growth and investment in fintech across markets.

And today, I am delighted to announce that the Australian Treasurer, Scott Morrison and I have just signed an agreement for a new FinTech Bridge between the UK and Australia.

This is our most ambitious collaboration to date, bringing together regulators, policy-makers and private sector leaders to collaborate on growing our respective fintech markets in tandem.

But our strategy is about more than sector specific interventions.

It is about championing the UK’s position as a pro-business, pro-innovation environment…

…about making it easier for knowledge intensive scale-up businesses to raise the funding they need…

…in short, about creating the best possible ecosystem for Fintech to thrive.

Last Autumn I announced the launch of an action plan to unlock over £20 billion of finance for high-growth innovative firms in the fintech sector and beyond.

And today I can set out some next steps:

From April, changes to the Enterprise Investment Scheme will take effect, significantly increasing investment in high-growth and knowledge-intensive firms.

And earlier this month, we published consultations on further extensions to this scheme and to Entrepreneurs Relief.

Alongside greater investment by individuals, greater institutional investment in venture funding is needed.

So alongside changes to tax relief, the British Business Bank will launch a new £500m programme in May that will invest in a series of funds to encourage co-investment by leading institutional investors in those businesses.

Later this year, the British Business Bank will launch a new ‘British Patient Capital’ investment fund– which will co-invest with the private sector to unlock £7.5 billion of public and private investment.

UK pension funds have relatively low allocations to patient capital and we are determined to fix that. The Pensions Regulator will clarify guidance on how trustees can invest in illiquid assets such as venture capital.

And as part of our plan to get the best Brexit deal for jobs, business and prosperity…

…we are discussing with the EU our future relationship with the European Investment Bank and European Investment Fund…

…and we will keep the financing needs of high growth businesses under continuous review as we leave the EU, and if necessary, we will use the British Business Bank to provide an alternative to the EIF, which has done great work in supporting the industry.

Britain is, and will remain, a great place to do business.

It is the global capital for Finance, Fintech, and a major hub of Fourth Industrial Revolution technologies…

…and my priority as Chancellor is to go on pushing us to do even better.

We will go on creating the conditions and providing the resources that have allowed pioneers from Charles Babbage to Ismail Ahmed to succeed.

Because Fintech offers the chance to connect the world…

…to deliver financial services and innovations that can drive widespread growth and prosperity…

…create millions of jobs, and build stronger, fairer, faster financial services that serve the common interests of all the peoples of this interconnected planet.

My commitment to you is that Britain will continue to drive this agenda…

…will continue to be the best place for fintech to thrive.

Because, Fintech is the future of global finance…

…and working together, we have a chance to reach that future faster.

We look forward to continuing to welcome you, from wherever you come from around the world, to stay and build for many years to come – and we wait with baited breath, to see the astonishing innovations you are going to reveal next.

Thank you.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, in the House of Commons on 13 March 2018.

I am pleased to introduce to the House the first spring statement. The UK was the only major economy to make hundreds of tax and spending changes twice a year, and major international organisations and UK professional bodies alike have been pressing for change. In 2016, I took the decision to move to a single fiscal event in the autumn, giving greater certainty to families and businesses ahead of the new financial year and allowing more time for stakeholder and parliamentary engagement on potential fiscal changes.

Today’s statement will update the House on the economic and fiscal position, report progress on announcements made at the two Budgets last year and launch further consultations ahead of Budget 2018, as I set out today in my written ministerial statement. I will not be producing a Red Book today, but of course I cannot speak for the right hon. Member for Hayes and Harlington (John McDonnell).

I am pleased to report today to the House on a UK economy that has grown in every year since 2010—an economy that, under Conservative leadership, now has a manufacturing sector enjoying its longest unbroken run of growth for 50 years, that has added 3 million jobs and seen every single region of the UK with higher employment and lower unemployment than in 2010, that has seen the wages of the lowest-paid up by almost 7% above inflation since April 2015 and that has seen income inequality lower than at any time under the last Labour Government. That is solid progress towards building an economy that works for everyone.

So I reject the Labour party’s doom and gloom about the state of the nation. Every Wednesday, we have to listen to the Leader of the Opposition relentlessly talking Britain down, and every year since 2010 we have had to listen to the right hon. Member for Hayes and Harlington predict a recession—none of which has actually happened. So if there are any Eeyores in the Chamber, they are on the Opposition Benches; I, meanwhile, am at my most positively Tigger-like.

As I contemplate a country which faces the future with unique strengths.

Our language is the global language of business.

Our legal system is the jurisdiction of choice for commerce.

We host the world’s most global city, and its international finance and professional services capital.

Our companies are in the vanguard of the technological revolution.

While our world-class universities are delivering the breakthrough discoveries and inventions that are powering it.

British culture and talent reaches huge audiences across the globe.

And our tech sector is attracting skills and capital from the four corners of the earth.

With a new tech business being founded somewhere in the UK every hour.

Producing world-class products including apps like TransferWise, CityMapper,

And Matt Hancock.

Mr Speaker.

Today the OBR delivers its second report for the fiscal year 2017-18.

And I thank Robert Chote and his team for their work.

It forecasts more jobs.

Rising real wages.

Declining inflation.

A falling deficit.

And a shrinking debt.

The economy grew by 1.7% in 2017, compared to 1.5% forecast at the Budget.

And the OBR have revised up their forecast for 2018 from 1.4% to 1.5%.

Forecast growth is then unchanged at 1.3% in 2019 and 20, before picking up to 1.4% in 21 and 1.5% in 22.

That’s the OBR’s forecast Mr Speaker.

But forecasts are there to be beaten.

As a nation, we did it in 2017.

And we should make it our business to do so again!

Our remarkable jobs story is set to continue.

With the OBR forecasting more jobs in every year of this parliament.

And over 500,000 more people enjoying the security of a regular pay-packet by 2022.

I am pleased to report that the OBR expect inflation, which is currently above target at 3%.

To fall back to target over the next 12 months.

Meaning that real wage growth is expected to be positive from the first quarter of 18-19, and to increase steadily thereafter.

Mr Speaker.

I reported in the Autumn that borrowing was due to fall in every year of the forecast.

And debt to fall as a share of GDP from 2018-19.

The OBR confirms this today.

And further revises down debt and borrowing in every year.

Borrowing is now forecast to be £45.2 billion this year.

£4.7bn lower than forecast in November.

And £108bn lower than in 2010 which, coincidentally, is almost exactly the total cost of the additional spending pledges made by the Labour party since the general election in June last year; it has taken them just nine months to work up a plan to squander the fruits of eight years’ hard work by the British people.

As a percentage of GDP, borrowing is forecast to be 2.2% in 17-18.

Falling to 1.8% in 18-19, 1.6% in 19-20, then 1.3%, 1.1% and finally 0.9% in ‘22-‘23.

Meaning that in 18-19 we will run a small current surplus, borrowing only for capital investment.

And we are forecast to meet our cyclically adjusted borrowing target in ‘20-21 with £15.4bn headroom to spare.

Broadly as forecast at the Budget.

Mr Speaker,

The more favourable outlook for borrowing means the debt forecast is nearly 1% lower than in November.

Peaking at 85.6% of GDP in 17-18.

And then falling to 85.5% in 18-19, then 85.1%, 82.1%, 78.3%, and finally 77.9% in 2022-23.

The first sustained fall in debt in 17 years.

A turning point in the nation’s recovery from the financial crisis of a decade ago.

Light at the end of the tunnel, another step on the road to rebuilding the public finances that were decimated by the Labour party. And it is one that Labour would again place at risk, because under Labour’s policies, our debt would not fall over the next five years; it would rise by more than £350 billion to more than 100% of our GDP, undermining our recovery, threatening investment in British jobs, burdening the next generation and wasting billions and billions of pounds more on debt interest. There is indeed light at the end of the tunnel, but we have to make absolutely sure that it is not the shadow Chancellor’s train hurtling out of control in the other direction towards Labour’s next economic train wreck.

Mr Speaker.

In Autumn 2016, I changed the fiscal rules to give us more flexibility to adopt a balanced approach to repairing the public finances.

Reducing debt.

Not for some ideological reason.

But to secure our economy against future shocks.

Because we in the Conservative Party are not so naïve as to think we have abolished the economic cycle.

Because we want to see taxpayers’ money funding our schools and hospitals, not wasted on debt interest.

And because we want to give the next generation a fair chance.

But I do not agree with those who argue that every available penny must be used to reduce the deficit.

And nor do I agree with the fiscal fantasists opposite who argue that every available penny should be spent immediately.

We will continue to deliver a balanced approach.

Balancing debt reduction against the need for investment in Britain’s future.

Support to hard-working families through lower taxes.

And our commitment to our public services.

Judge me by my record, Mr Speaker [political content removed].

Since Autumn Statement 2016, I have committed to £60 billion of new spending.

Shared between long-term investment in Britain’s future.

And support for our public services.

With almost £9 billion extra for our NHS and our social care system.

£4bn going into the NHS in 18/19 alone.

And as I promised at the Autumn Budget.

More to come if, as I hope, management and Unions reach an agreement on a pay modernisation deal for our nation’s Nurses and Agenda for Change staff.

Who have worked tirelessly since the Autumn in very challenging circumstances to provide the NHS care that we all value so highly.

£2.2 billion more on education and skills.

And £31 billion going to fund infrastructure, R&D and housing through the National Productivity Investment Fund.

Taking public investment in our schools, hospitals, and infrastructure in this parliament to its highest sustained level in 40 years.

And at the same time we have cut taxes for 31 million working people by raising the personal allowance again in line with our manifesto commitment.

Taking more than 4 million people out of tax altogether since 2010.

Freezing fuel duty for an eighth successive year, taking the saving for a typical car driver to £850 compared with Labour’s plans, and raising the national living wage to £7.83 from next month, giving the lowest paid in our society a well-deserved pay rise of more than £2,000 for a full-time worker since 2015.

Since becoming Chancellor, I have provided an extra £11 billion of funding for 2018/19.

To help with short-term public spending pressures.

And to invest in Britain’s future.

In the longer term, I can confirm that, at this year’s Budget I will set an overall path for public spending for 2020 and beyond.

With a detailed Spending Review to take place in 2019.

To allocate funding between Departments.

That is how responsible people Budget.

First you work out what you can afford.

Then you decide what your priorities are.

And then you allocate between them.

And if, in the Autumn, the public finances continue to reflect the improvements that today’s report hints at.

Then, in accordance with our balanced approach, and using the flexibility provided by the fiscal rules.

I would have capacity to enable further increases in public spending and investment in the years ahead.

While continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted.

A balanced approach.

Getting our debt down.

Supporting our public services.

Investing in our nation’s future.

Keeping taxes low.

Building a Britain fit for the future.

And an economy that works for everyone.

Updates since the Budget.

Mr Speaker.

There is much still to do.

Since Autumn 2016 we have set out our plan to back the enterprise and ambition of British business and the hard work of the British people.

A plan to unleash our creators and our innovators.

Our inventors and our discoverers.

To embrace the new technologies of the future.

And to deliver the skills we will need to benefit from them.

To tackle our long-standing productivity challenges.

And to say more loudly than ever that our economy will remain open and outward-looking.

Confident to compete with the best in the world.

We choose to champion those who create the jobs and the wealth on which our prosperity and our public services both depend.

Not to demonise them.

Mr Speaker,

The shadow Chancellor is open about his ideological desire to undermine the market economy, which has driven an unparalleled increase in our living standards over the past 50 years. We on the Conservative Benches reject his approach outright.

The market economy embraces talent and creates opportunity.

Provides jobs for millions and the tax revenues that underpin our public services.

So we will go on supporting British businesses.

We are reducing business rates by over £10 billion.

And we committed at Autumn Budget 2017 to move to triennial revaluations from 2022.

Today I am pleased to announce that we will bring forward the next business rates revaluation to 2021 and make the triennial reviews from that date.

We will launch a Call for Evidence to understand how best we can help the UK’s least productive businesses to learn from, and catch-up with, the most productive.

And another on how we can eliminate the continuing scourge of late payments – a key ask from small business.

Because Mr Speaker, we are the champions of small businesses and the entrepreneur.

Since the Budget, we have made substantial progress in our negotiations with the European Union.

To deliver a Brexit that supports British jobs, businesses and prosperity.

And I look forward to another important step forward at the European Council next week.

But we will continue to prepare for all eventualities.

And today my RHF the Chief Secretary is publishing the Departmental allocations of over £1.5 billion of Brexit preparation funding for 2018-19 which I announced at the Autumn Budget.

Our Modern Industrial Strategy sets out our plan to keep Britain at the forefront of new technologies.

With the biggest increase in public R&D spending for four decades.

Much of this new technology depends on high-speed broadband.

And today I can make the first allocations of the £190 million local full fibre challenge fund announced at Autumn Budget and confirm £25 million for the first 5G testbeds.

As our economy changes, we must ensure that people have the skills they need to seize the opportunities ahead, so we have committed over £500 million a year to T-levels—the most ambitious post-16 reforms in 70 years. From next month, £50 million will be available to help employers to prepare for the roll-out of T-level work placements. Last week the Education Secretary and I chaired the first meeting of the national retraining partnership between the Government, the TUC and the Confederation of British Industry. I can reassure the House that there was no beer and no sandwiches—not even a canapé—but there was a clear and shared commitment to training in order to prepare the British people for a better future ahead. Next month our £29 million construction skills fund will open for bids to fund up to 20 construction skills villages around the country.

We’re committed as a government to delivering 3 million apprenticeship starts by 2020 with the support of business through the apprenticeship levy.

But we recognise the challenges the new system presents to some small businesses looking to employ an apprentice.

So I can announce today that my Right Honourable Friend the Education Secretary will release up to £80 million of funding to support those small businesses in engaging an apprentice.

We publish a consultation on improving the way the tax system supports self-funded training by employees and the self-employed.

And because we currently understand more about the economic pay-back from investing in our infrastructure than we do about investment in our people.

I have asked the ONS to work with us on developing a more sophisticated measure of human capital.

So that future investment can be better targeted.

Mr Speaker, we’re undertaking the largest road building programme since the ‘70s.

As Transport Secretary, I gave the green light to fund the new bridge across the River Mersey in 2011.

And I was delighted to see it open late last year.

The largest infrastructure project in Europe, Crossrail, is due to open in just 9 months’ time.

We’re making progress on our plans to deliver the Cambridge-Milton Keynes-Oxford Corridor.

We’re devolving powers and budgets to elected mayors across the Northern Powerhouse and Midlands Engine.

We’re in negotiations for city deals with Stirling and Clackmannanshire, Tay Cities, Borderlands, North Wales, Mid Wales, and Belfast.

And today we invite proposals from cities across England for the £840 million fund I announced at the Budget to deliver on their local transport priorities.

As part of our plans to spread growth and opportunity to all parts of this United Kingdom.

And at the heart of our plan for building an economy that works for everyone is our commitment to tackle the challenges in our housing market.

With an investment programme of £44 billion to raise housing supply to 300,000 a year by the mid-2020s.

And today I can update the House.

We are working currently, with my Right Honourable Friend the Housing Minister, with 44 authorities who have bid into the £4.1 billion Housing Infrastructure Fund, to unlock homes in areas of high demand.

We are concluding housing deals with ambitious authorities who have agreed to deliver above their Local Housing Need.

And I can announce today that we have just agreed a deal with the West Midlands to have committed to deliver 215,000 homes by 2030-31, facilitated by a £100 million grant from the Land Remediation Fund.

And my Right Honourable Friend the Housing Minister will make further announcements on the over the next few days on the Housing Infrastructure Fund.

We will more than double the size of the Housing Growth Partnership with Lloyds Banking Group to £220 million, to help providing additional finance for small builders.

And London will receive an additional £1.7 billion to deliver a further 26,000 affordable homes, including homes for social rent, taking total affordable housing delivery in London to over 116,000 by the end of 2021-22.

Mr Speaker, my Right Honourable Friend for West Dorset has outlined his initial findings on the gap between planning permissions granted and housing completions.

In a letter which I have placed in the Library of the House.

And I look forward to his full report at the Budget.

And I am delighted to inform the House that an estimated 60,000 First Time Buyers have already benefited from the Stamp Duty relief I announced at the Autumn Budget. I remind the House that the Labour party voted against this.

In the Autumn, we published a paper on taxing large digital businesses in the global economy.

And today we follow up with a publication that explores potential solutions.

And I look forward to discussing this issue with G20 Finance Ministers in Buenos Aires at the weekend.

We also publish a call for evidence on how online platforms can help their users to pay the right amount of tax.

We will consult on a new VAT collection mechanism for online sales.

To ensure that the VAT consumers pay actually reaches the Treasury.

And we will call for evidence, too, on how to encourage cashless and digital payments, while ensuring cash remains available to those who need it.

Mr Speaker.

This government is determined that our generation should leave the natural environment in a better state than we found it.

And improve the quality of the air we breathe.

So we will publish a call for evidence on whether the use of non-agricultural red diesel tax relief contributes to poor air quality in urban areas.

And following our successful intervention to incentivise green taxis, we’ll help the Great British White Van driver go green with a consultation on reduced VED rates for the cleanest vans.

And follow up on the vital issue of plastic littering and the threat to our oceans.

With a call for evidence to support us in delivering on our vow to tackle this complex issue.

It will look at the whole supply chain for single use plastics.

At alternative materials.

Reusable options.

And recycling opportunities.

And it will look at how the tax system can help drive the technological progress and behavioural change we need.

Not as a way of raising revenue.

But as a way of changing behaviour.

And encouraging innovation.

We’ll commit to investing to develop new, greener, products and processes.

Funded from the revenues that are raised.

And as a downpayment Mr Speaker, we’ll award £20m now from existing departmental budgets to businesses and universities, to stimulate new thinking and rapid solutions in this area during the call for evidence.

Mr Speaker,

We are delivering on our plan.

With a balanced approach.

Restoring the public finances.

Investing in our economy and our public services.

Raising productivity through our modern industrial strategy.

Building the homes our people need.

Tackling the environmental challenges that threaten our future.

Embracing technological change, seizing the opportunities ahead.

As we build our vision of a country that works for everyone.

An economy where prosperity and opportunity are in reach of all.

Wherever they live.

Whatever their gender, colour, creed or background.

Where talent and hard work alone determine success.

A beacon of enterprise and innovation.

An outward looking, free-trading nation.

One that is confident that our best days lie ahead of us.

A force for good in the world.

A country we can all be proud to pass on to our children.

And, I commend this statement to the House.

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 7 March 2018 in Canary Wharf, London.

It’s great to be here in Canary Wharf, and I am grateful to HSBC for hosting me.

But I am conscious that holding this event in London risks feeding the prejudice that financial services is just a London business…

…when, in fact, of course it is a vibrant part of the economy across the length and breadth of Britain…

…with over two-thirds of financial services jobs outside London…

… and significant financial services hubs in Edinburgh, Leeds, Bristol, Belfast, Birmingham and Bournemouth, to name but a few.

On Friday, the Prime Minister set out the UK’s vision for its future economic partnership with the European Union…

….in a speech which answered the call to set out “what we want”…

…while being clear that we understand this is a negotiation, where both sides will need to give and take.

As the PM said, our task, together with our European partners, is to deliver a Brexit that works…

…for the UK…

…and for the EU.

A partnership that protects supply chains and established trade relationships…

…that backs businesses, safeguards jobs…

…and promotes the shared European values that we all hold.

And the first step will be delivering on the Implementation Period which was agreed as a fundamental part of the deal on Withdrawal issues that we did in December…

…and which we expect to be formalised at the March European Council meeting.

This Implementation Period is essential if we – and by “we”, I mean all of us, businesses and citizens, in all 28 countries – are to benefit from a smooth pathway to a future partnership between the UK and the EU.

Nowhere will this be more important than in Financial Services, where we must work together to avoid the potential risks to financial stability that could arise if we faced a cliff-edge in March 2019.

But for the Implementation Period to deliver the smooth transition we all want to see, it needs to be effective.

That means our regulators working together so that businesses – especially regulated businesses – are able to plan on the basis of it.

Giving full and meaningful effect to what we agreed in December…

…delivering clarity and certainty to businesses and citizens across Europe.

The PM was clear in her speech that after we have left the EU, we’ll be outside the Single Market and the Customs Union…

…but equally, we’ll be free to cooperate closely with partners, including the EU, where it is in our mutual interest to do so.

Financial services is such an area where we can, and should, collaborate closely.

…recognising that a future economic partnership will always need to ensure a fair balance of the rights and obligations associated with market access.

Today I want to build on the vision the Prime Minister delivered on Friday.

I want to explain why it makes sense, for both the UK and the EU, that we continue to collaborate closely on cross-border financial services.

I want to challenge the assertion that Financial Services cannot be part of a free trade agreement…

…to set-out why it is in the interest of both the UK and the EU27 to ensure that EU businesses and citizens can continue to access the UK Financial Services hub…

…and how this is not a zero-sum game, where any loss of market share in London is automatically a gain to another EU Capital.

And I want to describe what a future financial services component of a comprehensive trade partnership agreement could look like.

The UK Financial Services hub is an engine that powers the real economy not just in the UK, but right across Europe…

Because the fact is that the UK financial services hub is not just a British asset…

…but a European asset too…

…supporting businesses, savers and citizens across the EU…

…serving the whole of our continent, as well as the world beyond.

And not just serving Europe…

…but powered by the talent of hundreds of thousands of Europeans who work in it.

And it is an asset unparalleled in its history, its scale, its complexity, its agility and its connectivity to the economies of Europe and the world.

A “global public good”, as the IMF described it.

EU passporting did not create the City of London.

…nor did some smart regulatory fix or government incentive.

It is a combination of intangibles: language, legal system, time zone, culture, networks, risk appetite, regulatory approach…

…all blending together to create an ecosystem…

…an immensely potent combination of factors…

…impossible to replicate…

…or perhaps even to map.

Of course, having such a significant financial services industry brings to the UK great benefits…

…but it is not cost free.

The UK economy bears the related risks and UK taxpayers stand behind those risks.

As we learned to our very real cost during the financial crisis…

…when those taxpayers provided support to financial sector firms to the tune of £136bn.

…and that is not a lesson we will forget.

So, even as a member of the EU, we have chosen to go higher and faster on regulatory standards at times to protect our taxpayers.

And because we understand the risks we are taking, our commitment to rigorous and robust regulation will remain undimmed….

…David Davis was right in Vienna when he said that Britain’s plan is for a race to the top in global standards.

And because those risks are so significant, it is vital that the citizens of any country bidding to take on a bigger share of Europe’s financial services market have a full and transparent understanding of them.

The deep pools of capital, specialist skill and regulatory competence in London provide efficient, safe, and high quality services to the EU.

We manage EUR1.5 trillion of assets on behalf of EU clients;

Around two-thirds of debt and equity capital raised by EU corporates is facilitated by banks based in the UK.

78% of European Forex trading and 74% of European interest rate derivatives trading takes place in the UK. These are services that businesses rely on to run their operations efficiently, with the benefit passed on to consumers in all 28 EU countries.

And we should be under no illusion about the significant additional costs if this highly efficient market were to fragment.

Costs that would be borne by Europe’s businesses and consumers…

…costs that industry bodies across Europe are beginning to recognise.

The consultancy, Oliver Wyman calculates that the wholesale banking industry would need to find USD 30–50bn of extra capital if new regulatory barriers forced fragmentation of firms’ balance sheets.

And LSEG estimate that the EU’s proposal on location of clearing houses, if implemented, would increase costs to EU27 firms by around $25 billion a year…

…by fragmenting the market and losing the efficiency of “offsetting” between trades. Already evidence is emerging of market actors reassessing their commitment to Europe in the face of potential regulatory fragmentation.

For example, Intercontinental Exchange announced plans last month to launch daily gold futures contracts in the US next year, based on metal held in the UK.

Those who think that the major winners for any fragmentation of London’s markets would be Paris or Frankfurt…

…Dublin or Luxembourg…

…should take note!

The real beneficiaries are more likely to be New York, Singapore, and Hong Kong…

…cutting Europe’s market share.

And leaving Europe as a whole, less competitive…

…and more reliant on distant financial centres, operating under very different rules.

So it is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before:

…to them I say: “every trade deal the EU has ever done has been unique”.

The EU has never negotiated the same arrangement twice.

It has bespoke relationships with Turkey, Canada, Singapore, Korea.

Every FTA has varying degrees of market access depending on the countries involved…

…which is not surprising, given the different economies and the different interests reflected in those agreements.

In the last hour or so the EU has published its draft regulatory guidelines.

It is clear that a deal based wholly on precedent cannot deliver the depth and breadth of market access that these guidelines envisage.

Because any trade deal between the UK and the EU must start from the reality of today:

That our economies, including in Financial Services, are deeply interconnected;

That our regulatory frameworks are effectively identical;

That our supervisors and regulators work hand in glove to maintain the stability of our financial systems and have developed high levels of mutual trust;

And that our businesses and citizens depend on cross-border financial services trade in their day-to-day lives far more than most of them will ever know…

…when they buy a car…

…or take out a fixed rate loan…

…or hedge their fuel costs…

…or insure an aircraft.

The EU itself pursued ambitious financial services co-operation in its proposals for TTIP – which it described as a partnership that would be: “more than a traditional free trade agreement”. And in its initial proposals for CETA.

We know because back then, British and French officials worked hand-in-hand on the proposals, with the Commission.

Both CETA and TTIP were intended to promote convergence between entirely separate markets… …with different rules.

And low levels of interconnectedness.

We can do so much better…

…given our starting point..

At the time of the TTIP negotiations, people rightly argued that this was a challenging objective…

…but it need not be so in a partnership between the UK and the EU.

Our markets are already deeply interconnected.

If it could be done with Canada or the USA…

…it could certainly be done with the UK.

And there is another reason why it must be done:

A trade deal will only happen if it is fair and balances the interests of both sides.

Given the shape of the British economy, and our trade balance with the EU27, it is hard to see how any deal that did not include services could look like a fair and balanced settlement.

So I am clear not only that it IS possible to include Financial Services within a Trade Deal but that it is very much in our mutual interest to do so.

But in making that statement, I do not minimise the challenges.

I recognise that there will be many legitimate concerns…

…concerns about the policing of rules once we are separate legal jurisdictions…

…concerns about the legal framework for regulatory and supervisory cooperation…

…concerns about the implications for Financial Stability and for the operation of Eurozone monetary policy.

We stand ready to engage on all of these issues…

…and we have been giving a great deal of thought to how to address these concerns…

…to ensure that all our economies continue to benefit.

…rather than simply throwing in the towel and allowing the market to fragment…

…to everybody’s cost.

I will set out our initial thoughts…

…but first, let me say a word or two about financial stability.

We have come a very long way since the autumn of 2008.

Working collaboratively across the EU and indeed, beyond with international partners…

…we have increased the capital requirements of our banks…

…we have tightened supervision of their operations …

…and we have put in place resolution plans…

… to avoid contagion should the worst happen to an institution.

In the UK we have gone further and ring-fenced the retail banking operations of integrated groups from their wholesale market activities.

So the risk now to financial stability is not from continued close co-operation and integration…

…it is from the opposite: breaking up the intense co-operation that has developed between regulators across the EU and the UK.

Modern Europe is, quite literally, testament to the benefits of tearing down walls.

Let us not now propose new barriers where there need be none between our successfully collaborating financial services regulators.

So, building on the Prime Minister’s speech last week…

…let us consider how we might structure a future partnership in financial services…

…in a world beyond the single market and passporting.

A partnership that enables the ongoing delivery of cross-border financial services in both directions…

…while protecting financial stability…

…and consumers, businesses, and taxpayers across the UK and EU.

In my Mansion House speech last June, I set out three principles for a future partnership in financial services:

A process for establishing regulatory requirements for cross-border trade between the UK and the EU; Cooperation arrangements that are reciprocal, reliable, and that prioritise financial stability; and

A legal framework that makes this structure durable and reliable for participants in the market and for businesses who use their services.

Today, I want to describe how the vision of the Prime Minister’s speech could shape those principles into a framework that could be the basis of a future partnership in financial services…

…as part of a wide-ranging Free Trade Agreement.

We will start from a unique position…

…with full alignment on Day 1.

The challenge is what happens next.

So the way forward must surely be to bank our Day 1 defacto equivalence.

…and shape a regime to manage future regulatory change that ensures that…

…while our rule systems may evolve separately…

…we deliver fully equivalent regulatory outcomes…

…maintaining commitments to support open-markets and fair competition.

As these rules systems for financial services evolve, the United Kingdom cannot simply be an automatic ‘rule taker’.

Let me explain why.

We have invested heavily in the current rulebook, and our industry is structured around it.

And we hope that from Day 1, good sense, sound economics, and a commitment to mutual benefit will be the guiding principle of future rulemaking on both sides…

…often within the framework of internationally agreed regulatory standards.

But, because of the size of the UK’s financial services market…

…around 10 times our GDP…

…and the complexity of the products traded on it…

…and the consequent risks our taxpayers bear…

…we cannot sign up to automatically accept as-yet-unknown future rule changes.

We must have the ability, if necessary, to deliver an equivalent outcome by different means…

…maintaining our commitment to ensure access to each other’s markets is on fair and non-discriminatory terms.

…while protecting UK taxpayers from potentially unacceptable risks.

At first glance, this may appear to point to a solution based on the EU’s established third-country equivalence regime.

But that regime would be wholly inadequate for the scale and complexity of UK-EU financial services trade.

It was never meant to carry such a load.

The EU regime is unilateral and access can be withdrawn with little to no notice.

Clearly not a platform on which to base a multi-trillion pound trade relationship.

But the principle of mutual recognition and reciprocal regulatory equivalence, provided it is objectively assessed, with proper governance structures, dispute resolution mechanisms, and sensible notice periods to market participants clearly could provide an effective basis for such a partnership.

And although we will be separate jurisdictions, we would need to maintain a structured regulatory dialogue to discuss new rules proposed by either side…

…building on our current unparalleled regulatory relationships…

…to ensure we deliver equivalent regulatory outcomes…

…agreeing mutually acceptable rule-changes where possible.

And where rules do evolve differently we will need an objective process to determine whether they provide sufficiently equivalent regulatory outcomes…

…including not only the rules themselves, but also an assessment of the way in which they are enforced…

…drawing on international standards where they exist, or on additional principles for equivalence where the UK and EU have more developed rules.

Second, there would need to be continued close supervisory co-operation.

The EU itself noted in the context of TTIP discussions that “in too many instances, international standards have been implemented in a way that does not allow…the relevant regulators and supervisors to work together”…

…weakening the resilience of financial markets.

We must not risk exacerbating that tendency.

While the UK would cease to be a part of the EU’s supervisory agencies, there is no reason why we could not maintain a very close working relationship.

Indeed it would be an essential part of supporting the regulatory equivalence that I have described…

…for instance, through proactive and extensive information exchange…

…authorised by the data-sharing agreements within the overarching FTA…

…going far beyond what is available in ordinary third-country relationships.

It could cover market abuse, transaction reporting, and stability monitoring, as well as prudential concerns about individual firms…

…and it could involve a version of today’s college structures, covering both day-to-day supervision and resolution in crisis.

Of course how each party organises its internal governance would be a matter for it.

Neither party would have a role in the other’s governance processes.

But we should be able to build on the extraordinary level of supervisory collaboration and trust that already exists between the EU and UK authorities…

…to establish the most comprehensive supervisory cooperation arrangements anywhere in the world…

…protecting our respective financial systems and our taxpayers from instability risks.

We recognise, also, that the supervision of major clearing houses conducting euro-denominated activity is a particularly important and sensitive subject for our EU partners…

…and we stand ready to discuss a mutually satisfactory way forward in this area.

The supervisory cooperation that I have described does not involve either party transferring any responsibility for its rules or ceding any sovereignty.

And that leads me to the third principle.

As the PM said on Friday, in certain circumstances we may choose not to maintain equivalent outcomes but we will know there may be consequences…

…we would have to address how this future partnership would work in such circumstances…

…with clear institutional processes to do so.

Our concern in a financial services partnership would be to ensure that any such consequences were reasonable and proportionate…

…applied in a predictable way that allows industry to plan with confidence…

…and that they were delivered through an independent arbitration mechanism that has the confidence of both parties.

Such mechanisms already exist within FTAs, including CETA.

The Prime Minister was clear on Friday that we have decided to leave the EU…

…and we accept that there will be consequences.

We do not expect the same relationship we have today across all areas of activity in financial services…

…trade-offs should be expected…

…and the industry will change.

But we should ensure that the future partnership strengthens European stability and prosperity…

…rather than weakening it.

The ideas I have set out today suggest a way to move forward…

…to shape a potential partnership in Financial Services…

…based on the core concept of fair and non-discriminatory competition…

…recognising legitimate concerns where they exist…

…but drawing a distinction between those concerns, and protectionism or political expediency which would undermine that competition.

What I have set out today is a possible route to a future partnership grounded in logic, pragmatism, and compromise…

…a partnership that would protect Europe’s financial stability and underpin one of its great competitive advantages.

And I look forward to constructive engagement with our friends and partners in the EU to take these ideas forward.

Thank you.