We have set out a long-term economic plan
to secure our country’s economic future and our economy is growing. Just this week, the IMF upgraded its growth forecasts for Britain by more than any other G7 country and we have also seen the largest quarterly increase in employment since records began.
The key challenge for politicians and business leaders in Europe is how we make a success of globalisation. For years the West has been written off. People say that we are facing some sort of inevitable decline. They say we can’t make anything anymore.
I don’t believe it has to be this way.
Of course, we cannot be starry eyed about globalisation – it presents huge challenges as our economies and societies try to adapt. But neither should we take this pessimistic view.
Indeed if we make the right decisions, we may also see more of what has been a small but discernible trend where some jobs that were once offshored are coming back from East to West.
In recent years there has been a practice of offshoring where companies move production facilities to low cost countries. But there is now an opportunity for some of those jobs to come back.
A recent survey of small and medium sized businesses found that more than 1 in 10 has brought back to Britain some production in the past year – more than double the proportion sending production in the opposite direction. From food processing to fashion, from cars to computer-makers. It’s not just one sector; it’s across all sectors of the economy.
The food manufacturer Symington’s is moving its factory from China to Leeds.
Hornby the model train manufacturer is bringing some of its manufacturing from India to Britain.
Raspberry Pi computers have shipped production to Wales.
A company I visited yesterday morning – Vent-Axia – has shipped jobs from China to Crawley.
One recent forecast suggests millions of jobs could be available for re-shoring globally. To win these jobs we need to understand what is driving these changes.
Part of the story is about rising costs in the emerging markets, a natural consequence of these economies developing and their people becoming wealthier.
At the same time, there are a number of factors pulling companies back home. Some companies are choosing to locate production nearer to their consumer markets in the West. By shortening their supply chains, they can develop new products and react more quickly to changing consumer demand.
There is no doubt that when it comes to re-shoring in the US, one of the most important factors has been the development of shale gas, which is flooring US energy prices with billions of dollars of energy cost savings predicted over the next decade.
Taken together, I believe these trends have the ability to be a fresh driver of growth in Europe too. I want Britain to seize these opportunities. I think there is a chance for Britain to become the Re-Shore Nation. For years we have had UKTI out there helping our businesses to export and encouraging inward investment. Now I want to give that same dedicated specific support to helping businesses re-shore. So we are setting up a one stop shop to help businesses capitalise on the opportunities of re-shoring.
I am not saying that our economic success depends on winning some kind of race to the bottom nor should we be engaged in one. Getting decent, well-paid jobs at every level is what we are aiming for. And I believe that’s what we can get – and that re-shoring can help. When mobile network company EE recently decided to move 300 call centre jobs from the Philippines to Northern Ireland, they didn’t do it because wages were lower. They did it because productivity was higher and because the company decided it would be more successful by having a more local call centre for its customers. And as they make this move, they aren’t just creating jobs for telephone operators. They are creating jobs for managers, lawyers and technicians too.
Right now, economies in Europe have a unique opportunity to accelerate this new trend of jobs coming back home. And we should be confident that we can do this. As we do so, we should never forget one of our most important strengths. We should never undersell the core values of our liberal democracy; the rule of law, the freedom of speech and freedom of the media, property rights and accountable institutions, all vital foundations for long-term stability and commercial success.
But for re-shoring to happen we need to build on those foundations. That means settling once and for all two key arguments that risk undermining our competitiveness.
First, on the overall business environment. We need an unashamedly pro-business regulatory environment – with labour market flexibility, low jobs taxes and a willingness to pave the way for new business and new business models. We have to maintain the flexibility for companies to grow and expand.
And second, on the need for cheap and predictable sources of energy. Yes, we need renewables – these are a vital part of our future. We need nuclear as part of that energy mix too. But we also need to explore the opportunity represented by shale gas. Now I understand the concerns some people have. We need the right regulations and governments need to reassure people that nothing would go ahead if there were environmental dangers. But if this is done properly, shale gas can actually have lower emissions than imported gas.
The Confederation of British Industry and Business Europe are coming together to launch a “Blueprint for Industrial Competitiveness”. Their message is clear. Act now to seize the opportunities of re-shoring. Deal with our debts. Roll back the unnecessary regulation. And embrace the opportunities of shale gas.
Business is making the case. If we act now we can ensure our businesses, our peoples and our societies can benefit from the next phases of globalisation. The security, stability and peace of mind that those we serve yearn for can only be delivered by facing the difficult choices. We must not fail them.