What a blast! For over a month now the world has been gripped by Olympic fascination and excitement. A total of more than 14,000 Olympic athletes including 4,200 Paralympic athletes descended on London to give the performance of their lives. Spectators saw numerous records tumbling across the board and an atmosphere that truly inspired a generation of wannabe Olympians. I am proud of Team GB finishing third in the medal table winning the amazing total of 65 medals. And the UAE’s first gold medal in this year’s Paralympics is great cause for celebration. But now, as even the Paralympics draw to a close, what will happen when the flame dims?
The woes that have long cast shadows over the world economy remain. The UK is no different, with GDP contracting by 0.5 per cent in the quarter to June and early indicators for the third quarter suggesting a modest rebound. While this comes as an economic disappointment it doesn’t come as a surprise: we are all recovering from the worst economic crisis in living memory, and the UK is not immune to the problems in the Euro Area.
But let me assure you that we are well aware that “Economy GB” is lagging behind “Team GB’s” stunning success during the Olympics. Returning the UK to economic growth and stability is our overriding priority. The UK Government has already taken a series of bold decisions to fight economic turbulence and foster strong, sustainable and balanced growth. First and foremost, it has agreed on a comprehensive fiscal plan that aims to produce a primary surplus and reduce debt by the end of 2015. As a result, within two years the deficit has been cut by more than 25 per cent and interest rates remain at a record low. Reducing unemployment is a core priority, too, with much cheer being taken by 201,000 new employment opportunities having been created in the three months to June and inflation halving since its last peak in September 2011.
Taxation is a particular area we are determined to get right. To make Britain one of the most competitive places to do business, the Government has put in place a series of major tax reforms. By 2014, Britain will have the most competitive business tax system in the G20 and is set to have the lowest corporate tax rate of the G7. In addition, the Government has unveiled ‘UK Guarantees’ to dramatically accelerate major infrastructure investments.
The strong fundamentals of the UK economy, which is the seventh largest economy in the world, will bring about recovery. We are a stable gateway to Europe, which remains the world’s largest single market, with its population of over 500 million. The World Bank ranks the UK seventh in the world for ease of doing business and considers it to be one of the most stable political and regulatory environments in which to do business.
It is worth a word about the nature of the UK economy. Britain is a highly export driven market, the world’s sixth largest manufacturer and the world’s sixth largest trading nation. It is already now exporting more goods to the rest of world than to the European Union. During the second quarter of 2012 the UK exported £38 billion worth of goods to non-EU countries compared to £36 billion worth of goods to the EU. Between 2010 and 2011 UK exports increased by 10 per cent from £448 billion to £493 billion. Being the UK’s largest export market in the Middle East and North Africa, the UAE is a significant partner to us. Links between our two countries are long lasting and deep rooted and ones we want to develop further. Our partners benefit from our world-class position in many fields - advanced engineering, creative industries, defense and security, education, energy and financial services to name but a few. Many British household names are here already; Fosters and Partners, behind the design of Masdar City and the Shaikh Zayed National Museum; Rolls Royce, in joint venture with Mubadala; BAE Systems in the defence area. Many more have come recently to support the UK’s long-term commitment and the close relationship with the UAE. Our commercial ties with the UAE and other Gulf partners are a core element of the economic recovery that we are targeting for the UK economy.
No one is born an Olympian. Becoming one requires hard work, dedication and perseverance from the early start. The same applies to achieving economic success in these difficult times. Countries across the world have to face some hard truths and make some difficult decisions at the moment. We believe we have already done that for the UK economy. Just like pulling off the Olympics through careful planning over the past decade, we are sure the British economy has the fundamentals in place to become match fit for the economic challenges in the decade ahead.
