Philip Hammond – 2019 Statement on ECOFIN

Below is the text of the statement made by Philip Hammond, the Chancellor of the Exchequer, in the House of Commons on 16 July 2019.

A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 9 July 2019. The UK was represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council discussed the following:​

Early morning session

The Eurogroup President briefed the Council on the outcomes of the 8 July meeting of the Eurogroup, and the European Commission provided an update on the current economic situation in the EU. Ministers then discussed potential new sources of revenue for the upcoming multiannual financial framework the EU’s long-term budget.

Own resources

The Finnish presidency gave an update to the Council on the potential new sources of revenue for the upcoming multiannual financial framework, following a discussion during the early morning session.

Presidency work programme

The Finnish presidency presented its work programme on economic and financial matters for July to December 2019.

Appointment of the President of the European Central Bank

The Council adopted a Council recommendation on the appointment of Christine Lagarde as the next President of the European Central Bank.

European semester

The Council adopted the 2019 country-specific recommendations as part of the European semester process.

Any Other Business

The Dutch Finance Minister briefed ministers on the topic of aviation taxation and carbon pricing.

Philip Hammond – 2019 Statement on ECOFIN

Below is the text of the statement made by Philip Hammond, the Chancellor of the Exchequer, in the House of Commons on 24 June 2019.

A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Luxembourg on 14 June 2019. ECOFIN was preceded by a meeting of the European Investment Bank (EIB) Board of Governors:

Annual EIB Board of Governors meeting

The meeting included: statements from the Chairman, President and Chairman of the Audit Committee; a governors discussion; a presentation on the annual report of the Audit Committee; and a vote for partial renewal of the Audit Committee. The UK was represented by Mark Bowman (Director General, International Finance, HM Treasury) during the EIB meeting.

Following this, EU Finance Ministers discussed the following at ECOFIN:

Early morning session

The Eurogroup President briefed the Council on the outcomes of the 13 June meeting of the Eurogroup, and the European Commission provided an update on the current economic situation in the EU.

Banking union

The Council endorsed the progress report on the banking union.

Financial transaction tax

The Council received a progress update in relation to the enhanced co-operation on financial transaction tax.

G20 follow-up

The Romanian presidency and Commission presented the main outcomes of the G20 meeting of Finance Ministers and Central Bank Governors, which took place on 8 to 9 June in Fukuoka, Japan.

European semester

The Council discussed a horizontal note on the draft 2019 country specific recommendations, and progress towards the Europe 2020 targets.

Stability and growth pact

The Council adopted Council decisions and recommendations on the implementation of the stability and growth pact.

Clean planet

The Council held an exchange of views on a strategic long-term vision for a climate-neutral economy.

Non-performing loans

Under any other business, the Commission provided an update on the implementation of the action plan to tackle non-performing loans in Europe.

Philip Hammond – 2019 Speech at the Resolution Foundation

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, at the Resolution Foundation on 30 May 2019.

Thank you Torsten, it’s a great pleasure to be here with you this morning and I welcome your latest report as a valuable contribution to this debate.

Ten years ago, the world was in the throes of the worst financial crisis since the Great Depression.

The banking system was broken.

The economy was in recession.

People were at risk of losing their jobs and their savings.

Thanks to our economic plan, and the hard work of the British people, we have turned a corner in our long recovery from that period.

The economy has grown now for nine straight years.

The deficit last year was just 1.1% of GDP and our national debt is falling sustainably for the first time in a generation…

…meaning that, going forward as a nation, we once again have genuine choices.

And we have, of course, got a remarkable story to tell on jobs – with the employment rate at a record high and unemployment at its lowest point since 1975.

I am proud of that record – but the job is not yet done.

We are still dealing with the deepest scars of the recession – in the form of weakened productivity growth, and, especially, low wage growth, which remains below pre-recession levels, despite recent improvements.

We have, of course, already acted to address the challenge of low wage growth for those on the lowest pay.

The introduction of the National Living Wage in 2016 gave Britain’s low paid the biggest pay rise in 20 years.

When we increased the rate again in April, 1.8 million workers were better off.

The pay of a full-timer on national living wage has risen by £2750 a year since 2016

And the percentage of jobs defined as low paid, as today’s Resolution Foundation report shows, is at its lowest level since 1980.

But with around 18% of the workforce still working in low paid jobs, there is more to do.

Despite the recent good news on wage growth, a decade of low rates of pay increase has slowed the rate of growth in living standards.

And it has also played into a deeper sense of anxiety about our economic system, about our society and our politics.

An anxiety which has been exploited by John McDonnell to propose statutory wage rises that would manifestly be unsustainable…

…and deeply damaging to the interests of those they purport to benefit;

A plan which is, in the words of the Institute for Fiscal Studies, “risky and dangerous”.

The truth is that we have seen a gap open up – in Britain and in other developed countries – between the theory of how a market economy and free trade creates and distributes wealth, and the reality experienced by many ordinary people.

We ignore that gap at our peril because if we do not address it, it will be filled with the reckless promises of the populists.

But that doesn’t mean we should abandon our economic model.

As so often is the case, the populists do not have the answers, but they are quick to identify the problems.

So for those, like me, who believe passionately that harnessing the power of market economics is the only way to deliver progress…

…it is imperative that we take decisive action to show that the regulated market model can respond to these challenges;

…to deliver higher wages and higher living standards…

…as well as providing solutions to the great societal challenges of our age.

That means building the homes that the next generation needs;

Supporting people of all ages to embrace technology change through retraining and reskilling, so that technology means higher living standards, not higher unemployment;

It means closing the gap between our regions through sustained investment in infrastructure;

And harnessing market-based solutions to show that de-carbonisation and rising living standards can go hand-in-hand.

But above all, it means delivering rising living standards, through sustainable real wage growth, year after year.

Of course, over the medium term, sustainable real wage growth is only possible through productivity growth.

That’s why I have redirected government resources to that goal, through record levels of investment in infrastructure, a renewed focus on skills, and a relentless programme of support for innovation in the economy.

But raising Britain’s productivity is a medium-term challenge. And there is some evidence to suggest that the continued availability of flexible, low-cost labour, may undermine the incentive for productivity-enhancing investment.

So if we are going to meet our ambition of making the economy work for everyone, one of the best levers we have is to deliver carefully considered increases to the National Living Wage.

In 2016, we set a target for the National Living Wage to reach 60% of median earnings by 2020 – and we will deliver on that, giving a pay rise to millions of workers.

Now we need to decide where to go next.

And as I said in the Spring Statement earlier this year, we want to be ambitious, with the goal of ultimately ending low pay altogether in this country.

But we do not want to be reckless – taking excessive risks with the employment prospects of the lowest paid, or with our future economic growth.

From my initial conversations with trade union and business leaders alike, it is clear that there is a broad support for that ambitious approach…

…and broad support, too, for a careful implementation of it, avoiding unintended consequences.

We are greatly helped of course in this country in navigating the path to a sustainable higher National Living Wage by the existence of the LPC, a highly respected tri-partite body embracing employers, unions and academics, able to act as an independent and impartial advisor on the rate of progress that is sustainable.

So our task is to set the remit within which the LPC will work – and to ensure they have sufficient flexibility to allow them to deliver it sustainably.

To help us identify how to do that, I asked Professor Arin Dube, as a recognised expert on minimum wage policy, to review the evidence, particularly evidence from international comparators. I’m delighted to welcome him to London this week – and I look forward to receiving his report in the autumn. And, indeed, to hearing from him in just a moment.

Let me finish with one final thought.

Whoever the next Prime Minister is, one of his or her central tasks will be to show a new, and sometimes sceptical, generation that a properly regulated market economy remains the most powerful force available to us for unlocking aspiration and raising living standards.

And bold, decisive action on the National Living Wage, sustainably delivered, will be an important demonstration of the power of that argument…

…and a necessary step to re-build confidence in the politics of the centre ground.

Because that centre ground is under threat.

On the left, the Labour Party characterises business as “the real enemy”;

On the right, the argument for radical tax cuts, deregulation and smaller government is gaining ground – just as our population demographics are making them harder to do.

And as we look to re-build the case for centre ground politics…

…we should take a bold step in writing the next chapter in the story of statutory minimum wages in the UK – a story which began under the Labour Government of 1997…

…but which took a giant step forward under the Conservative Government in 2016 –

So that we demonstrate, once again, that the well-regulated market delivers for all our people.

Now, I look forward to hearing the thoughts of Professor Dube and others about how we can turn that vision into a sustainable reality.

Thank you.

Philip Hammond – 2019 Statement on ECOFIN

Below is the text of the statement made by Philip Hammond, the Chancellor of the Exchequer, in the House of Commons on 23 May 2019.

A meeting of the Economic and Financial Affairs Council (ECOFIN) was held in Brussels on 17 May 2019. The UK was represented by Mark Bowman (Director General, International Finance, HM Treasury). The Council discussed the following:

Early morning session

The Eurogroup President briefed the Council on the outcomes of the 16 May meeting of the Eurogroup, and the European Commission provided an update on the current economic situation in the EU. Ministers then discussed the possibility of the European Investment Bank developing country strategies. Lastly, the Commission updated on the state of play on negotiations on the definitive system of value added tax.

Excise duties

The Council discussed the directive on general arrangements for excise duty (recast), the regulation on administrative co-operation of the content of electronic registers, and the directive on the structures of excise duty on alcohol and alcoholic beverages.​

Current financial services legislative proposals

The Romanian presidency provided an update on current legislative proposals in the field of financial services.

International meetings

The Council held an exchange of views on digital taxation in the international context, and the presidency and Commission updated the Council on the outcomes of the G20, IMF and World Bank spring meetings that took place in April. The Council then mandated the Economic and Financial Committee to approve the terms of reference for the upcoming G20 meeting in June. Lastly, the Finnish delegation debriefed the Council on the first meeting of the Finance Ministers coalition for climate action.

European semester

The Council adopted conclusions on the outcomes of the 2019 in-depth reviews of macroeconomic imbalances in member states as part of the macroeconomic imbalances procedure; and the implementation of 2018 country-specific recommendations.

Institutional cycle priorities

Under the non-legislative AOB, the presidency informed the Council on the follow-up discussions in regards to priorities for the next institutional cycle in the ECOFIN area.

Working lunch

Following on from the discussions at April informal ECOFIN in Bucharest, EU Finance Ministers held a working lunch to discuss the challenges of labour mobility and their potential solutions, followed by an exchange of views on the way forward in areas of the economic and monetary union, specifically in regards to the reform support programme.

Philip Hammond – 2019 Speech at CBI Annual Dinner

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, at the CBI Annual Dinner on 21 May 2019.

Thank you, John, for that introduction.

It is a pleasure to be here once again in the old Whitbread building.

And if the CBI is trying to make a cheap point by literally organising your annual piss up in a brewery, I am going to pretend I haven’t noticed it!

Actually, this building has a fascinating history.

For more than a hundred years, the Speaker of the House of Commons’ carriage was kept here.

If you haven’t seen it, it is a spectacularly grand, gilded and polished affair – I am talking about the coach, not the Speaker.

This was a working brewery until 1976. The year before I started my first job, and a time when the UK economy was fast-approaching its post-industrial revolution nadir…

… dominated by state-owned industries; crippled by unbridled Union power and incessant politically-motivated strikes and protected by rigid exchange controls and managed exchange rates…

…where credit was rationed by the government, and the top marginal tax rate on investment income was 98%.

Visibly falling behind the other Members of the EEC, which we had just joined.

And with our politics polarising to reflect the radically different solutions of left and right to the nation’s challenges.

We have come a long way since then.

Our economy is transformed. Our manufacturing sector once again boasts global champions;

British design and innovation, derided back then, is now respected throughout the world;

Our services sector has been liberated from stifling regulation and short-sighted protectionism to soar ahead as a powerhouse of the new economy;

And the UK has become a magnet for investment, for entrepreneurship and for talent from across the globe.

Our recovery from the fiscal consequences of the financial crisis a decade ago has reached a turning point: our deficit is now lower than it was before the crisis and our national debt is falling sustainably for the first time in a generation.

Meanwhile, the UK has grown continuously for nine straight years, and despite domestic uncertainty and a slowing world economy, the OBR is forecasting growth for the next five as well.

Judged against our peers, the UK economy is robust: Since 2010, we have grown as fast as Germany, and faster than France, Italy and Japan.

On jobs, we have a remarkable story to tell,with the employment rate at a record high and unemployment at its lowest rate since 1975.

Over 3 ½ million net new jobs since 2010. And of the nearly half a million net additional people in work over the last year, virtually all are in full time jobs.

And there’s good news on pay, too – with the OBR forecasting wages to rise by 3% or more in each of the next five years…

…while inflation is forecast to remain at, or very close to, the target of 2% throughout the forecast period.

This robust economic and fiscal performance is the result of nearly a decade of hard work by the British people, and of a clear economic strategy by the government.

My predecessor’s number one focus was, quite rightly, on fixing the public finances, inheriting, as he did, a record peacetime fiscal deficit.

But when I became Chancellor in 2016 I recognised that, as well as getting Britain’s debt down, our continued success as a nation depends on investing in our future, supporting our public services, and keeping taxes low to attract talent and investment.

This ‘balanced approach’ is now delivering, with the highest sustained levels of public capital investment in 40 years…

…a Modern Industrial Strategy to respond to the long-term challenge of low productivity;

Income tax cuts for more than 30 million people;

…and over £150 billion of new spending commitments since 2016, including a £34bn a year increase for the NHS…

…the single largest cash commitment ever made by a peacetime British Government…

…but all of it anchored in a framework of fiscal responsibility, with our deficit now just1.2% and our national debt falling sustainably for the first time in a generation.

Fiscal responsibility is a proud boast of Conservative Governments, and I know that, over the coming months, my colleagues will want to protect that reputation – and so will resist the ever-present temptation to write cheques the country cannot afford.

Because we must not undo a decade of hard work by the British people by making unfunded commitments that would send our national debt soaring; leave the economy vulnerable to future shocks; burden future generations; and waste billions on interest payments.

People must know they can trust Conservatives with the public finances.

So our economy and our public finances are in far better shape than they were 40 years ago.

Wages and living standards are dramatically improved since then.

And yet, there are worrying echoes of the 1970’s in the re-polarisation of the political debate today.

Populism is on the rise.

Globalisation – which has transformed the lives of hundreds of millions across the planet, and driven rising living standards here in the UK, has become something of a dirty word;

Free trade is under attack from all sides and the multilateral institutions which have upheld the post-war international system are challenged as never before;

Trade tensions and the rise of protectionism are now a real threat to world trade and economic growth.

On the left and right of politics, at home and abroad, the allure of superficially easy answers to complex problems – the political equivalent of the “free lunch” – fills the vacuum created by frustration with the politics of the centre ground.

And Brexit continues to wrap our economy in a cloud of uncertainty – with the continued possibility of a “No Deal” exit remaining a real threat to our future prosperity.

So I want to say a few words tonight about how we can meet this growing challenge.

But it is worth noting that doing so today will be more complicated than it was in the 1970s.

Because underpinning, and to some extent driving, the political malaise in Britain – and in many other developed economies, are four major, unavoidable, structural changes that are shaping the context for this debate:

1) The inexorable shift of economic power from the West towards the Emerging Economies of Asia, and its inevitable long-term consequence for the balance of strategic power as well.

2) The need for rapid de-carbonisation of our economy, with huge implications for the allocation of capital and the sustainability of current business models;

3) The ageing of our populations and the implications for our economies, for migration policy and for intergenerational equity;

4) And finally, the unparalleled scale of the technological revolution on which we are embarked – a revolution that will profoundly change our lives, our jobs, our economy and our politics.

And all of these will be happening at once; all imposing huge demands for resources and attention – both in terms of political bandwidth and in terms of business management-time.

So the background is challenging, to put it mildly. And against that background, we face real and present dangers to our economic well-being from populists of left and right.

On the populist right, there are those who now claim that the only outcome that counts as a truly legitimate Brexit is to leave with No Deal.

Let me remind them: the 2016 Leave campaign was clear that we would leave with a Deal.

So to advocate No Deal is to hijack the result of the referendum, and in doing so, knowingly to inflict damage on our economy and our living standards.

Because all the preparation in the world will not avoid the consequences of No Deal.

So I will continue to fight, in the face of this polarisation, for a negotiated Brexit…

…an outcome that respects the British people’s decision to leave, while recognising that there is no mandate for a “No Deal” exit; and that we have an absolute obligation to protect Britain’s jobs, businesses and future prosperity.

But we need to be clear, that if we do not resolve this issue in the next few weeks, there is a real risk of a new Prime Minister abandoning the search for a deal, and shifting towards seeking a damaging No-Deal exit as a matter of policy…

…in order to protect an ideological position which ignores the reality of Britain’s economic interests and the value of our precious Union.

And we need to be clear, too, that lurking ever larger behind this immediate challenge of right-wing populism, is the even greater danger of left-wing populism…

…manifest in John McDonnell’s increasingly brazen policy assault on the fundamental fabric of our modern, open, economy…

…with proposals for nationalisation of businesses without compensation; appropriation of equity shares; direction of investment; and ruinous levels of taxation and borrowing to finance yet another experiment in market manipulation and social engineering that is doomed to fail, as it predecessors, at home and abroad, have always done…

…and which must surely lead to capital flight and, ultimately, exchange controls.

Both approaches offer a disaffected electorate temptingly simple solutions to the complex problems that drive their discontent.

Neither will deliver.

Those who believe that they can make Britain better off by increasing barriers to trade and those who think that greater prosperity and a better society can be delivered by subverting the market rather than harnessing it, are both wrong – as history will confirm.

But the truth is that a gap has opened up – in Britain and in other developed countries – between the theory of how a market economy and free trade creates and distributes wealth, and the reality experienced by many ordinary people…

…creating a dissatisfaction that is fertile ground for populism to grow in.

And since populism cannot be defeated by confronting one set of simplistic, undeliverable solutions with another…

…we have to be prepared to eschew simple answers…

….and make again the complex, and to some, counter-intuitive, case for well-regulated open markets, free and fair trade, fiscal discipline and market economics;

Explaining how, as we tackle the great challenges of our economy in the 21st century – ageing, technology, climate change and productivity…

…the mechanisms of the market and the benefits of openness will allow us to create enduring, sustainable solutions.

Solutions that deliver real results, not empty promises.

But defending the market economy means demonstrating how, specifically, it can meet the challenges that matter most to a generation who may be pre-disposed to believe that it cannot.

And it means showing by doing, not by telling.

It means delivering rising real wages and living standards year after year;

Building the homes that the next generation needs – at prices they can afford;

Supporting people of all ages to embrace technology change through retraining and re-skilling, so that technology means higher living standards, not higher unemployment;

It means closing the gap between our regions through sustained investment in infrastructure, including strategic projects like HS2;

Demonstrating that higher productivity can provide the answer to the challenge of an ageing population;

And harnessing market-based solutions to show that de-carbonisation and rising living standards can go hand-in-hand.

In short, it means validating the open, free-trading market economy system as “fit-for-purpose” for the challenges that we face in the 21st Century

That’s necessary to re-build confidence in the politics of the Centre ground…

…and it’s necessary to “re-licence” business to play the vital role that it must in our society.

And it can only be done by Government and Business working together to deliver prosperity and opportunity in every part of Britain.

The immediate priority must, of course, be delivering a solution to the Brexit impasse.And we made a great step forward today.

Because the Government’s, and Parliament’s seeming inability to do so is undermining confidence in our political system…

…and because continued uncertainty is now having a real and damaging impact on our economy.

When I accepted this invitation to speak, back in January, I planned to speak about Britain’s future in the context of a Brexit deal that had been done!

And I didn’t even focus on the juxtaposition with the European Elections later this week!

The threat of “No Deal as Policy” should unite all those who reject it as reckless and dangerous.

I was an early advocate of seeking to reach a compromise agreement with other parties and factions to break the impasse in the House of Commons.

So, I was disappointed, but not surprised, when the Leader of the Opposition ended the formal discussions last week.

The truth is, the incentives in our political system discourage such initiatives.

But both of us have learned a great deal about each other’s positions from those talks…

…and I believe that the case for compromise remains as strong as ever.

If we are to have any hope of re-uniting our country and repairing our politics after the divisions of the last three years, we cannot have half the country feeling they have completely won and the other half, that they have completely lost.

Britain needs a Brexit that feels like a compromise; a Brexit that delights no-one, but one that everyone, or nearly everyone, can live with.

And in a Parliamentary democracy, which this country is, the only sustainable Brexit solution is one that can command a majority in the Parliament.

So the right way forward is to build on what we have learned of the concerns and aspirations on the Labour side…

…and add it to what we already know of the concerns and aspirations of our colleagues on the Government side, and others across the House who are open to a negotiated exit…

…to craft a compromise that can deliver Brexit and settle this question, once and for all,in a Withdrawal Agreement Bill that will represent a bold, new proposal addressed to MPs on all sides of the House of Commons.

But let me be clear on one thing: that is where the attempt at consensus with the Opposition ends.

Because beyond Brexit, we can and must challenge head-on the anti-market, anti-business ideology of the left…

…with its false promises and easy answers…

…and promote instead a clear plan to build on the strengths of the British economy as we tackle the challenges and harness the opportunities of the future…

…working in a partnership with business…

…using the authority of Government to set the direction of travel…

…but with the private sector as the front-line agent of change – mobilising private capital and harnessing the power of the market to ensure effective delivery.

Working together to raise productivity as the only sustainable path – not only to higher wages and rising personal living standards…

…but also to delivering our social objectives, and our strategic goals, such as decarbonisation.

That means capital investment, both public and private, in infrastructure and technology…

…and it also means a partnership to deliver the home-grown skills and training that Britain needs to prosper…

…and a genuine collaboration to ensure a future immigration regime that supports the needs of business and the economy without unnecessary bureaucracy.

That’s why we embarked on an unprecedented year-long consultation on the post-Brexit migration regime: we said we want to hear the views of business, and I am sure you are not going to disappoint us!

There is no doubt that we are facing an unprecedented period of challenge in our public life.

Uncertainty over Brexit.

Anxiety over our economic model.

Anger about our politics.

All set against the backdrop of a long, and sometimes apparently conflicting list of urgent imperatives:

Decarbonising our economy; rescuing our environment; housing our population; adopting new technology; increasing our productivity, and adapting to demographic change.

No wonder the British people are concerned,and it would be an insult to ignore them.

The populists do not have the answers – but they are pretty good at identifying the grievances.

To trump them, we need an optimistic vision for the future – but one that is grounded in reality…

…with solutions that work with the grain of our society and harness the power of markets, the energy of business and the resource of private capital…

…to deliver answers to these multiple,simultaneous, challenges.

And to allow us to harvest the tremendous opportunities that lie within them.

Solutions that address the future…

…not hark back to the past;

That promote unity, not further division;

That deliver real change, not simply rhetorical shift;

And that speak to our ambition for a country whose best years, we firmly believe, lie ahead of it.

Thank you.

Philip Hammond – 2019 Belt and Road Forum Speech

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, in China on 26 April 2019.

Excellencies; Ladies and Gentlemen. It’s a pleasure to be back in China for this second Belt and Road Forum. To take stock of how the Belt and Road Initiative (BRI) has evolved over the past two years…

…to discuss the next phase of the Initiative.

To hear, as we have of China’s commitment to the BRI not only to deliver much-needed economic infrastructure, but to demonstrate leadership in addressing social and environmental ‎challenges too;

We have all seen how China’s own development has lifted hundreds of millions of its citizens out of poverty in just four decades…

…and none of us doubts that the Belt and Road Initiative has tremendous potential to spread prosperity and sustainable development – touching, as it does, potentially 70% of the world’s population.

A project of truly epic ambition…

…and I congratulate President Xi and the Chinese people on the scale of this vision…

..and the determination with which it has been pursued.

The UK is committed to helping to realise the potential of the BRI – and to doing so in a way that works for all whose lives are touched by the project.

The potential benefits are clear to all of us in this room;

But to deliver them, it is essential that BRI operates to the highest international standards;…

…with all parties working together‎ in partnership within the rules-based international system…

…to create genuine win-win outcomes, in which host countries, investors and promoters alike benefit…

…with fair terms…

… sensitivity to local concerns and traditions…

…and the highest environmental standards…

…all delivered to international norms of good governance…

…with full transparency around projects, and around the sustainability of the debt that partner countries are incurring to secure them;

…Ensuring that Belt and Road is an example of how globalised, open economic cooperation can deliver benefits for all.

And I welcome the “triple pledge” we heard from President Xi Xinping this morning to ensure the highest international standards in delivery of Belt and Road, to maintain China’s commitment to free trade and multilateralism; and to continue the reform and opening up of China’s economy.

Two years ago, at the First ‎Belt and Road Forum, I spoke of the UK as a ‘natural partner’ in Belt and Road…

…citing the complementarity of the UK and Chinese economies…

…the potential of London’s deep capital markets to support the future financing needs of the BRI…

…and of the strength of the UK’s legal, professional and technical ‎services sectors to support the design, development, contracting and delivery of BRI projects.

And since then, I have worked to turn that vision of cooperation into a reality.

In May 2018, I was pleased to appoint Sir Douglas Flint, former Chairman of HSBC, as HM Treasury’s Financial and Professional Services Envoy to the Belt and Road Initiative;

Under his chairmanship, we’re bringing together UK business leaders from financial and professional services and China Development Bank, Bank of China, and China Construction Bank to establish a Belt and Road expert board in London.

We have launched, in April 2019, a three year China Infrastructure Programme to work with China to improve infrastructure development outcomes in Africa and Asia.

And we have worked with the AIIB to deepen our relationship and to support the development of a pipeline of high-quality infrastructure projects.

It is clear that, to support the sheer scale of the BRI vision, private finance will need to play an ever greater role in these infrastructure projects.

And to unlock that private finance, and reassure investors, we must create a recognised infrastructure asset class for Belt and Road projects…

…with standardised contract terms and uniform reporting that global investors will recognise and trust.

In doing so, we should, of course, draw on the work that G20 and other international organisations are doing to create frameworks for sustainable infrastructure investments; and I want to offer London’s world class expertise in project financing and the associated legal, professional and technical skills as a partner of choice in delivering these international-standard infrastructure projects.

The BRI is an extraordinarily, ambitious vision. To turn that vision into a sustainable reality it must work for everyone involved.

That means achieving the highest economic, social, governance and environmental standards;

It means attracting the necessary private capital;

It means ensuring that all partner countries and all their citizens can benefit.

Our offer is to bring the best of Chinese manufacturing, engineering and construction with the best of British project design and legal, technical and financial services expertise…as we harness the “Golden Era” of UK-China relations…

…to deliver world-class sustainable infrastructure for all for the twenty-first century.

I look forward to working with all of you to make that happen…

To deliver jobs, growth and higher living standards for all of our citizens.

Philip Hammond – 2019 Speech at the Annual Asian Business Awards

Below is the text of the speech made by Philip Hammond, the Chancellor of the Exchequer, on 3 March 2019.

Good evening..

Thank you to the Asian Media Group.

I’m delighted to be here tonight at the Asian Business Awards, 22 years after the first of these fantastic events, in 1997, the year I was first elected to Parliament.

Quite a bit has changed since then – I’ve got a bit greyer,

and the Asian business community in the UK has gone from strength to strength…

…Asian markets have become more and more important to British businesses…

…and the global balance of economic power has shifted decisively in favour of the emerging Asian economies.

Later this year, India will overtake the UK to become the world’s fifth largest economy.

Kalpesh, you spoke earlier about Steve Jobs’ phenomenal success. That reminded me that in 1997 Michael Dell, founder of Dell computers, gave this piece of advice: the best thing to do with Apple would be to “shut it down and give the money back to the shareholders”.

Luckily, at number 39 on the Forbes rich list, his career progress does not appear to have impeded his judgement.

But some things haven’t changed – my beliefs when I first became an MP are the same things that drive me 22 years later as Chancellor of the Exchequer.

A belief in the market economy as the best, indeed, the only way to deliver future prosperity for the British people.

A belief in Britain as an open, tolerant, outward-looking nation, confident and competitive in the world.

And above all, a belief in the power of business – that self-starters, entrepreneurs, investors are the engine of our economy, and the bedrock of our communities.

And our job in government is to reinforce that vision….

and support successful business leaders like you to power up the British economy for the 21st Century.

First, let me say a few words about the horrifying terrorist attack in New Zealand last week, and in the Netherlands just a few days ago.

Violence of any kind against innocent people is deeply shocking…

…and attacks based on race, ethnicity or religion are particularly abhorrent and have no place in our society.

Our thoughts and prayers are with the people of Christchurch and Utrecht, with the families and friends of those who died in these attacks and with all those who have been injured or affected by them.

But it is not enough only to condemn. As we confront the ideologies of hate, we must also make a positive argument for the kind of society that we want to be.

A democracy that is built on the indivisible foundations of religious, political and economic freedom;

A society that is confident enough in our identity and our values to embrace diversity;

And an economy that harnesses the power of that diversity to grow.

Market capitalism has been the greatest engine for prosperity the world has ever seen; but it has also been the driver of political freedom and stability.

In the marketplace, the common interest of commerce means that faith or ethnicity, class, background or nationality all matter less than your ability to strike a deal, develop a brilliant new product or service, or to spot an opportunity.

Those values of enterprise and tolerance have long been part of the British story.

And they are a part of the British Asian story too.

My friend and colleague, Sajid Javid, the Home Secretary, asks the rhetorical question – how many countries can genuinely say that the son of a penniless, immigrant bus driver can become the holder of one of the most powerful political offices in the land – in the space of a single generation?

Energy, ingenuity and hard work – those are the qualities that have driven all of you in this room to become some of the most successful businessmen and women in the country.

And that is what tonight is all about.

A celebration of the men and women who are nominated for awards later this evening;

A celebration of the vital role the Asian community has played in modern Britain’s success.

And a celebration, too, of the power of business and enterprise to do good.

And of the willingness of so many who have done so well – to plough the proceeds of their good fortune and hard work back into our society through philanthropy.

As a Conservative I’m clear that it’s the private sector that drives growth and prosperity in our society.

So our guiding mission, as we leave the European Union, is to make sure Britain continues to be a great place to do business…

And we have a plan to do that.

First, as I set out in my Spring Statement last week, despite the slowing global growth, Britain’s economy has defied expectations.

It has grown for nine consecutive years, with the longest unbroken quarterly growth run of any G7 economy, and is forecast to continue growing in each of the next five years.

And thanks to the hard work of the British people, our debt is now falling sustainably for the first time in a generation.

A solid foundation as we build Britain’s future.

Second, we have a plan to raise Britain’s productivity and boost growth.

We are increasing public investment to its highest sustained levels in 40 years, with a £37 billion National Productivity Investment Fund…

…and record investment in our roads, railways and broadband…

…we are putting technical and vocational skills back at the heart of our education system – so that as digitisation of our economy changes the labour market, our workforce is ready to take on the jobs of the future…

…and we are cutting taxes on the wages people earn and on the businesses that employ them, with 32 million people receiving a tax cut from next month, and business enjoying the lowest rate of Corporation Tax in the G20.

But Britain’s future prosperity will be at risk if we leave the EU without a negotiated deal and a close future partnership.

The member states of the EU are our nearest neighbours and they are our largest trading partners.

Over 45 years, we have built close business and trading relationships…

…and complex supply chains which criss-cross our continent.

As business people, you will understand that it is those carefully constructed and painstakingly maintained relationships that underpin the value of a business…

…and we must protect that investment at all costs.

There will be change ahead as we navigate a path to a new relationship – so we will need to adapt.

But 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, many of which are in South and South-East Asia.

Making Global Britain a reality.

I am acutely conscious that I am standing between 850 people and their dinner – so let me conclude with one final thought.

Nearly three years on from the EU referendum, I know the ongoing uncertainty is damaging for business…

…and I know every one of you in this room would like us to have resolved this issue many months ago.

But democracy is a messy business:

Churchill famously described it as the worst form of Government, except all those other forms that have been tried.

But we are now in the final furlong.

And I’m confident that we are on track to get a deal – as we must.

And when we do, all the pieces are in place for our country to thrive:

Strong economic foundations;

Sound public finances;

World-leading businesses;

A cutting-edge tech sector;

A Global services industry;

A vibrant, entrepreneurial class;

A deep commitment to free and open markets;

An open and tolerant society;

I look forward to the day, very soon I hope, when I, and you, can stop talking about Brexit…

…get on with the business of business…

…investing; creating jobs; generating wealth…

…so that we can get back to the growth in our economy and the progress in our society that our people expect and deserve.

I know we can do it together.

Thank you.

Philip Hammond – 2019 Speech at EEF

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.

Philip Hammond – 2019 Speech at TheCityUK Annual Dinner

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.

Philip Hammond – 2019 Speech at CBI Lunch in Davos

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.