Hm Treasury
Good Morning
Thank you for that welcome, thank you all for joining us at Bloomberg.
From the way we communicate and collaborate, to the way we buy and sell goods and services, digital technology has transformed nearly every aspect of our economic lives.
How do I know that?
Because I too, just like Matt asked ChatGPT to craft the the opening lines of this speech.
Who needs politicians when you have AI?
Like other countries, the UK has been dealing with economic headwinds caused by a decade of black swan events: a financial crisis, a pandemic and then an international energy crisis.
And my party understands better than others the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth.
But another Conservative insight is that risk taking by individuals and businesses can only happen when governments provide economic and financial stability.
So the best tax cut right now is a cut in inflation.
And the plan I set out in the Autumn Statement tackles that root cause of instability in the British economy.
The Prime Minister talked about halving inflation as one of his five key priorities and doing so is the only sustainable way to restore industrial harmony.
But today I want to talk about his second priority, to grow the economy. (In case you werent sure, I have them on the screen behind me.)
We want to be one of the most prosperous countries in Europe and today Im going to outline the 4 pillars of our plan to get there.
Just as our plan to halve inflation requires patience and discipline, so too will our plan for prosperity and growth.
But its also going to need something else which is in rather short supply Optimism, but we can get there.
Just this month columnists from both left and the right have talked about an existential crisis, Britain teetering on the edge and that all we can hope foris that things dont get worse.
I welcome the debate - but Chancellors, too, are allowed their say.
And I say simply this: declinism about Britain is just wrong.
It has always been wrong in the past - and it is wrong today.
Some of the gloom is based on statistics that do not reflect the whole picture.
Like every G7 country, our growth was slower in the years after the financial crisis than before it.
But since 2010, the UK has grown faster than France, Japan and Italy. Not at the bottom, but right in the middle of the pack.
Since the Brexit referendum, we have grown at about the same rate as Germany.
Yes we have not yet returned to pre-pandemic employment or output levels.,
But an economy that contracted 20% in a pandemic still has nearly the lowest unemployment for half a century.
And while our public sector continues to recover more slowly than we would like from the pandemic strengthening the case for reform - our private sector has grown 7.5% in the last year.
Yes inflation has risen - but is still lower than in 14 EU countries, with interest rates rising more slowly than in the US or Canada.
And yes we have to improve our productivity. But output per hour worked is higher than pre-pandemic.
And last week a survey of business leaders by PWC said the UK was the third-most attractive country for CEOs expanding their businesses.
Economists and journalists know you can spend a long time arguing the toss on statistics,
But the strongest grounds for optimism comes not from debating this or that way of analysing data points but from our long term prospects: because when it comes to the innovation industries that will shape and define this century the UK is powerfully positioned to play a leading role.
Lets just look at some of them.
In digital technology, as we heard from Michelle, we have become only the third economy in the world with a trillion-dollar sector.
We have created more unicorns than France and Germany combined with eight UK cities now home to two or more unicorns.
The London / Oxford / Cambridge triangle has the largest number of tech businesses in the world outside San Francisco and New York.
PWC say that UK GDP will be up to 10% higher in 2030 because of AI alone. Fintech attracted more funding last year than anywhere in the world outside the US.
Or life sciences, where we have the largest sector in Europe. And a brilliant advocate with our superb Science Minister George Freeman.
We produced one of the worlds first Covid vaccines, estimated to have saved more than 6 million lives worldwide.
We identified the treatment most widely used to save lives in hospitals, saving more than a million lives across the globe.
We are behind only the US and China in terms of high-quality life science papers published, and every one of the worlds top 25 biopharmaceutical firms has operations in the UK.
Another big growth area is our green and clean energy sector.
The UK is a world leader here, with the largest offshore wind farm in the world. Last year we were able to generate an incredible 40% of our electricity from renewables. But on one day, a rather windy December 30th, we actually got 60% of our electricity from renewables mainly wind.
McKinsey estimate that the global market opportunity for UK green industries could be worth more than 1 trillion between now and 2030.
And we are proceeding with the new plant at Sizewell C, led by our excellent Business Secretary who also spoke very wisely and surprisingly classically earlier on.
I could also talk about our creative industries which employ over two million people and grew at twice the rate of the UK economy in the last decade.
They have made the UK the worlds largest exporter of unscripted TV formats and help give us a top three spot in the Portland Soft Power index.
Or our advanced manufacturing sector, key to exports, where we produce around half of the worlds large civil aircraft wings and its biggest aeroengines as well as around half of the worlds Formula One Grand Prix cars.
The golden thread running through the industries where the Britain does best is innovation.
Amongst the worlds largest economies, the Global Innovation Index ranks us fourth globally.
Those innovation industries now account for around a quarter of our output. They have been responsible for nearly all our productivity growth since 1997.
And theyre also the reason that all of you are here.
In the audience we have leaders from Meta, Microsoft, Amazon, Apple and Google, the worlds largest tech companies all with major operations in the UK.
We have Monzo and Revolut, shining examples from our world-beating fintech sector.
And we have founders and CEOs from some of our most exciting UK technology companies, like Proximie and Matillion.
You are all vital for Britains economic future, but Britain is vital for your future too.
So I want to ask all of you to help our country achieve something that is both ambitious and strategic.
I want you to ask you to help turn the UK into the worlds next Silicon Valley.
What do I mean by that?
If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here [in the UK].
I want the worlds tech entrepreneurs, life science innovators, and green tech companies to come to the UK because it offers the best possible place to make their visions happen.
And if you do, we will put at your service not just British ingenuity - but British universities to fuel your innovation, Britains financial sector to fund it and a British government that will back you to the hilt.
Our universities are ranked second globally for their quality and include three of the worlds top ten.
In order to support the ground-breaking work they do in so many new fields the government has protected our 20 billion research budget, now at the highest level in history.
And as you look for funding to expand, we offer one of the worlds top two financial hubs and the worlds largest net exporter of financial services.
The capability of the City of London combined with the research strengths of our universities makes our aspiration to be a technology superpower not just ambitious but achievable - and today I am here to say the government is determined to make it happen.
But like any business embracing new opportunities, we should also be straight about our weaknesses.
Structural issues like poor productivity, skills gaps, low business investment and the over-concentration of wealth in the South-East have led to uneven and lower growth. Real incomes have not risen by as much as they could as a result.
Confidence in the future though, starts with honesty about the present.
We want to be one of the most prosperous countries in Europe, so today I set out our plan to address those issues.
That plan, our plan for growth, is necessitated, energised and made possible by Brexit.
The desire to move to a high wage, high skill economy is one shared on all sides of that debate.
And we need to make Brexit a catalyst for the bold choices that well take advantage of the nimbleness and flexibilities that it makes possible.
This is a plan for growth and not a series of measures or announcements, which will have to wait for budgets and autumn statements in the years ahead.
But this plan is a framework against which individual policies will be assessed and taken forward.
I set out that plan, those priorities under four pillars. They build on the People, Capital, Ide