SPEAKER Giles Paxman

DATE 16/12/2009

It is a great pleasure to be addressing you on this festive occasion. As I mentioned when I was privileged to introduce the British Secretary of State for Culture, Media and Sport, Ben Bradshaw, to the participants at the British Hispanic Forum on “Creativity and Innovation in Culture”, I am convinced that organisations like the British Hispanic Foundation have a crucial role to play in developing strong and friendly relations between our two countries. Governments can only do so much. The work of the British Hispanic Foundation, whether it be through scholarships, conferences or events, like this one, emphasises and celebrates the depth and breadth of the common interests, history, culture and traditions that have helped to make our two countries great, and help us to perpetuate those links for the future.

Over 20 years ago, when Spain had just joined NATO and the European Union, I was proud to be given the responsibility for running the Spain desk in the Foreign Office. I recall visiting Madrid and sitting opposite Lord Nicholas Gordon Lennox, the then Ambassador, as he explained to me the intricacies of our bilateral relationship. Never in my wildest dreams could I have imagined that one day I would be following in Nicky’s footsteps and occupying the newest and highest Embassy in Europe.

What strikes me most, returning to Spain after all those years is how much our economic and commercial relations have grown. Over 700 British companies are now operating in Spain. Britain exports goods worth some 16billion pounds every year to Spain. Over 500 Spanish companies now have operations in the UK. In 2008 Spain exported to the UK goods and services worth 21 billion pounds. Of course, there are many reasons for this rapid expansion but a good part of this credit must go to the British Chamber of Commerce here in Madrid for the work you do to underpin our bilateral commercial relationship and help to identify new opportunities for promoting it.

As some of you will know – as Felipe de la Morena has mentioned – I have spent most of my diplomatic career in Europe. I have served in Brussels (twice), Rome and Paris as well as dealing with European Affairs in London, and I am proud to say that I am a convinced European. It is therefore a particular pleasure for me to be returning to Madrid at a time when Spain is about to take over the Presidency of the European Union. She does so at a time of real importance for the Union, with a new Treaty, a new Commission, a new President of the European Council and a new (British) High Representative for Foreign and Security Policy. It will fall to Spain to help these new institutions to bed in, to oversee work to help our economies recover from recession and to create the basis for sustainable growth over the longer term. I know that the Spanish authorities are aware of the importance of the task facing them. And I know that they will discharge their responsibilities with distinction.

I admit, however, that I have been a little surprised to see the depth of scepticism propagated in the Spanish press about the British role in Europe.

It is true that Britain has not joined the euro, and it is true we are not part of the Schengen area. It is also, I fear, true that we are unlikely to win prizes for our high flying European rhetoric. I do not, however, believe that it is true to say that we are fundamentally bad Europeans. On the contrary, I think we are good Europeans. I believe that Britain has brought, and still brings, at least as much to the European Union as most other members. Let me give you some examples.

First, although it may sound a little prosaic, it is nevertheless undeniable that the foundation of the European Union is the common market. Let’s be proud of this. The common market is what makes the Union strong – and what makes us listened to around the World. And I believe that Britain has done at least as much as any other country to make the single market a reality. Not through talking, but through practical action and example. When I switch on the kettle to make a cup of tea in my flat in London, the electricity comes from a French company and the water from a German company. My streets are cleaned by a French company and my mobile phone connects with a Spanish owned network. And if I want to come to Madrid, I travel on a Spanish operated metro line to a Spanish owned airport. Does this sound like an anti-European country to you?

Ah, I hear the critics say, that’s all Britain ever wanted for Europe: a single market. Not so. Think back 10 years to the birth of the so-called “Lisbon Strategy”, which is due to be reviewed under the Spanish Presidency. Then, as now, Britain and Spain were perhaps the two main countries pressing for a coherent European vision to drive forward Europe’s economy and help us compete in the globalised world of the 21st century.

And in that globalised world, Britain puts the full weight of our global diplomacy at the service of the European Union. If you’re in any doubt about our hopes and aspirations for Europe as a global actor, read David Miliband’s speech last month in which he set out a clear vision and clear objectives and priorities for European diplomacy.

Moreover, in Britain we believe that European diplomacy, “soft power”, has to be supported by, and I quote, “the capacity for autonomous military action, backed up by credible military force”. These words are taken from the Anglo/French agreement at St Malo in 1998 that created the basis for common European security and defence policy. Since then, Britain has been one of the key architects of that policy, and one of the main contributors to its operations. So it is no coincidence that the headquarters of the most recent such operation, Operation Atlanta to curb piracy off the Somali coast is located in Northwood, just to the north of London.

We may not be much good at singing the praises of Europe. And we do not refrain from criticising when we think Europe is interfering unduly with matters that are best handled within individual Member States. We negotiate hard to ensure that whatever obligations we accept in Brussels we are able to apply and implement at home. This may not win us friends. But we have an expression: The Englishman’s word is his bond. That is why we have always been at the right end of the Commission’s league table of countries with infractions proceedings against them, and why, in the latest year for which figures are available, we were the only country to see more infractions dismissed than declared.

And while we are talking about meeting our EU obligations, Britain is one of the few European countries that will meet out EU carbon emissions reduction targets. As the Copenhagen summit draws to its conclusion it is worth mentioning that the UK has done more that most to focus EU attention on the challenge of climate change and put the EU i n the forefront of action to combat this major threat to the wellbeing of future generations.

Many of you are businessmen. You look at the bottom line. You have heard talk of British rebates and checks. Perhaps some of you think that we want Europe on the cheap. So let me tell you which is the country that, year in, year out, has contributed most in net terms to the EU budget and continues to do so. Well, actually, it is Germany, but Britain (despite our rebate) is number two.

So we may not be the most vocal Europeans and we will continue to fulfil the role that we believe other Member States want and expect us to fulfil in drawing attention to the practical realities and consequences of EU actions. But I do not believe that this means that we are bad Europeans. Rather, I think that we are pragmatic Europeans – and that if we didn’t exist Europe would have to invent us!

The other misconception I want you to help me dispell is that the economic situation has left the UK broke.

The world has experienced unprecedented economic turmoil in the last year. The UK has been deeply affected. But the fundamentals of our economy remain strong. All those years of restructuring, reform and modernisation have stood us in good stead to emerge rapidly and strongly from recession.

The City of London still has the biggest concentration of financial and business expertise in the World. We are still the sixth largest manufacturing economy in the World. The UK is still the easiest place to set up and run a business in Europe. According to the World Bank, it takes 13 days to set up a business in the UK, compared to the European average of 32 days. UK is ranked first in Europe and sixth in the world to operate a business. Every hour, 120 companies register with Companies House.

We also have one of the most flexible labour markets in the world. Again quoting the World Bank, we are ranked as the second best place to employ workers in Europe, the first being Denmark.

We have a stable regulatory environment, a stable political environment and we’re a world leader in innovation, research and development.

Global businesses are already convinced. We are still the largest recipient of foreign investment after the US. More overseas companies set up their European headquarters in the UK than anywhere else.

Big Spanish companies like Telefonica, Santander, Ferrovial and Iberdrola are already taking advantage of the excellent investment conditions in the UK. We are helping smaller, and specialised companies to do so too.

As we emerge from recession it is important that we do so with an economy that is equipped for the low carbon economy of the 21st century. We must avoid repeating the mistakes of the past. In the UK we believe that economic growth is compatible with lowering emissions: indeed we have already proved this. Since 1990, the UK economy has grown by 48% while emissions have fallen by 20%.

We are also determined to benefit from the multi-trillion pound market the global low-carbon economy will create. At the moment in the UK, we have about 800,000 people employed in low-carbon industries and services – everything from insulation to trying to produce the electric car. We expect that number will go up by 400,000 over the next year or two. That means there will be 1.2 million jobs in this area alone.

We are changing our policies and learning from our friends to take advantage of these new opportunities. Our Low Carbon Industrial Strategy is a comprehensive plan to move the country on to a permanent low carbon footing and to maximise economic opportunities, growth and jobs. In renewable energy, for instance, the approach draws on the success Spain has had in promoting green generation

These measures will help future-proof the UK economy and help the EU in its efforts to build a low carbon future. But they also represent new opportunities for companies that recognise the challenge of moving to a low carbon economy and adapt rapidly to meet it. These will be the most competitive and successful companies of the future.

At a corporate level, our companies increasingly “get it”. Dozens of UK and Spanish companies from many different sectors have signed the Copenhagen Communique calling for an ambitious, effective and equitable deal. Business wants this kind of certainty to trigger the billions of dollars of investment needed in low carbon products, services, technologies, and infrastructure. This will give us the sustainable economic growth and create the new jobs we need.

Thank you and may I wish you all a very Merry Christmas.