Thank you for inviting me to speak at the final session of this the first ever annual conference of the British Irish Chamber Conference.
It is I understand, on some method of calculation, the first such event in 98 years. It also happily confirms a new and fruitful relationship between our islands.
In purely economic terms, around €50 Billion per annum and over 100,000 jobs are directly attributable to that relationship – of which the members of this chamber contribute around €35 Billion and around 54,000 jobs.
After so much absorption in the issues that have divided us, it is appropriate to concentrate on what we have in common. Specifically, from your members’ point of view, these islands are globally focussed, outward looking and export driven. We share cultural, legal and business values. We have one language in common, an occasional touring rugby team and we are all of us tied together by family, friendships and countless other links.
It is perhaps ironic, and indeed fortuitous, that Ireland and Britain have rediscovered the importance of their economic relationship, and the importance of each other as markets, after the heady days of the mid-Nineties to the mid-Noughties.
Five years ago we didn’t need help from anybody. We didn’t need a British Irish Chamber of Commerce. Indeed, some of us seemed to think we didn’t need exports any more. Thankfully, we have recovered our senses and we are prepared to roll up our sleeves again.
From Ireland’s perspective we have rediscovered that London is a vibrant market of 8 million people on our doorstep and, if it sells in Templeogue, then it probably sells in Twickenham too. Our businesses have gone out and worked hard and the export numbers bear testimony to that effort.
Equally, when the Chancellor of the Exchequer agreed to a bilateral loan as part of the Irish financial assistance package, his decision was no doubt informed by the fact that a sizeable portion of British exports and investments are here and needed to be protected.
Taking a longer term perspective, Ireland and Britain have a very extensive and growing trading relationship. Britain is Ireland’s biggest trading partner and goods exported to Britain grew by a massive €1 billion in 2012. Britain is our biggest market for key sectors such as food and beverages, and tourism.
Another way of looking at the scale and importance of the British market is that a tiny loss of exports to Britain – between a half and one per cent – would immediately wipe out the hard won increase in exports to the famous BRICs. We need therefore to remain competitive in that market.
Thinking more strategically, Britain is still the market of first resort for new Irish exporters who are trying to get a foothold before taking on further challenges around the globe. The similarities in business culture, language and legal systems, as well as extensive transport links, make Britain a less intimidating export market than most if not all others.
Similarly with investment flows, many British and Irish companies set up operations on the other island, not because of grants or agencies and so forth, but because it makes business sense to do so. Tesco employs 13,500 people in Ireland and many Irish food companies have plants in Britain, it makes basic business sense.
It should not be any surprise therefore that our existing trade and investment platform made an ideal base from which to launch a more strategic economic relationship between Britain and Ireland. That is why the Taoiseach and Prime Minister Cameron launched their Downing Street initiative last year. In simple terms, the two Governments have agreed to look at the potential for collaboration in fundamental areas such as energy – which I will return to – food, construction, financial services and the creative and IT world, as well as in R & D.
To underpin the pursuit of this agenda, we also agreed on a joint evaluation of the existing deep levels of economic integration and interrelationship between Britain and Ireland.
Yes, this is part of good neighbourly political relations. But it is also about further assisting Irish business to become global and to create good quality and sustainable employment, which is this Government’s Number One priority.
In the meantime the British economy is facing its own difficulties, as it tackles its deficit and its debt overhang. It is not an easy marketplace at present and it is imperative that our businesses are supported in every way possible by the Government agencies, by the British Irish Chamber and by the various Irish business networks in Britain.
There are many challenges to developing the economic relationship and to Irish trade with Britain. But none of these challenges would as great as if there was to be a material change in the nature of Britain’s trading relationship with the European Union as a whole.
It would be an appalling vista to imagine a return to tariffs or other trade barriers between us.
I have had enough experience of Irish referendums, on EU and other issues, to know that voters can be sensitive to what they perceive as interference from abroad in an issue that is to be decided by themselves. This issue concerns our shared future, however. I will repeat the Irish Government’s declared view that the EU is stronger with Britain as part of it. We want to see the UK remain – and remain central – to the European Union.
I was struck by an overlap and continuity of content between the statement made by the two Premiers last year and Mr Cameron’s speech last Wednesday. At Downing Street the Taoiseach and the Prime Minister confirmed not just that we are partners in the European Union but that we are also both firm supporters of the Single Market; we both want to encourage an outward-facing EU which promotes growth and jobs.
In his Bloomberg speech Mr Cameron asserted that: “At the core of the European Union must be, as it is now, the Single Market. Britain is at the heart of that Single Market, and must remain so.”
He also said – and I have to agree with him – that “when the Single Market remains incomplete, in services, energy and digital – the very sectors that are the engines of a modern economy – it is only half the success it could be.”
The Prime Minister confirmed that completing the Single Market should be our driving mission. And he stressed that continued access to the Single Market is vital for British businesses and British jobs.
In that speech, which is more nuanced than the headlines might suggest, Mr Cameron set out what seems to me to be a compelling case for the UK’s continuing and active membership of the EU. This is very welcome. Like all Member States, the UK gains from its membership of the Union: it also makes a valued contribution and, I believe, the EU is stronger for having it on board.
Both our governments share this desire to complete the Single Market and we both believe that the Single Market should in particular take advantage of digital opportunities, reflecting the growing importance of online commerce and trade, should open up services markets and should establish a genuine, efficient and effective internal market in energy.
Indeed, energy policy was highlighted in the Downing Street joint statement as an area for further work. Among the common long term challenges to our prosperity which we share is the need for secure, competitive and sustainable sources of energy. We need to develop further interconnectivity, North-South and East-West, in order to facilitate security of supply and enhanced competition
Yesterday Secretary of State Davey and I signed a Memorandum of Understanding on Cooperation in the Energy Sector.
My hope is that we will enable new projects of significant scale in green energy on this island and, in the process, create significant employment in parts of this country where jobs are badly needed.
I have described this as a win-win scenario. On the one hand, the UK has challenging mandatory renewable energy targets to meet. On the other hand, Ireland has thousands of acres of cutaway bog and extensive afforestation, as well as propitious wind resources.
The Memorandum we signed yesterday affirms out two countries’ shared commitment to maintaining a strong partnership on energy issues, to achieving closer integration of our electricity markets and to maximising the sustainable use of renewable energy resources – all essential ingredients of the Single Market agenda.
So, firstly, by that agreement we have committed ourselves to a programme of work that will, I believe, prove the merits of proceeding very quickly to a formal inter-governmental agreement – and to a new export industry for this island.
Secondly, however, our ambition is not confined to providing a framework for renewable energy export. Progressing towards a common, EU-wide, Internal Market for Energy remains a key shared objective. That market will deliver real benefits for EU energy consumers – but only when electricity is being traded and transmitted backwards and forwards across frontiers, at scale and at competitive prices. And fulfilling that ambition requires infrastructure.
This
is one of the issues we must now examine. In preparing for this new market, we need to study all the options, including the infrastructure, connection, operation and delivery options, in detail. Many issues arise, including issues of a practical, technical, regulatory and financial nature. It is far too soon to be making final judgments as to whether any of the projects so far submitted will be approved and under what level of overarching design.
I would, however, hope it proves possible to fully optimise the infrastructure associated with these new renewable energy export projects in a way that provides long-term benefits for both Irish and UK customers.
If it proves achievable, I would prefer a plan-led approach, which makes optimal use of any additional infrastructure installed, rather than a simple direct connection approach that sees wind farms on Irish soil simply as off-shore generating capacity for the UK grid.
A plan-led approach could mean gains for consumers in terms of greater system security, lower system development costs, greater levels of renewables penetration and greater links to other energy markets. And, if they improve the operation of the Internal Energy Market, then renewable energy export projects that achieve greater interconnection would be more likely to qualify for EIB and CEF support.
In that regard I note that, in its call for proposals for projects of common interest, the Commission has said that particular attention will be given to projects that contribute, inter alia, to optimising network capacity and to the integration of the internal energy market.
So, if there is potential for an optimised approach that sees developers still being able to achieve their commercial goals but also sees British and Irish consumers achieve these structural gains, then I believe this is the approach we should pursue.
We will work closely with the UK Government on these issues so that we are in a position to move very quickly towards a formal agreement on energy trading. There is no fait accompli at this stage. In terms of joint project selection, while some project developers have made announcements about projects they are planning, the decision remains one to be taken under the aegis of the two Governments and nothing has been decided yet.
A transparent process for project selection, along the lines of a competitive tendering process, would I think be required to decide on the projects that will go ahead. Again, the format for project selection is one of the items on our agenda for decision.
We will need to ensure that the wind export path we design is the right one. While that path will allow badly needed private funding to “come out to play”, it must also be built to last. Most importantly, it must bring benefits to all parties, especially to both Irish and British consumers.
I understand you had a good discussion on energy matters yesterday afternoon. I was particularly encouraged by the focus of panel participants on the significant opportunities that both renewables and energy efficiency offer. Sustainability opportunities, whether in smart technologies, electricity storage or wind export, are as I have stressed also “growth and jobs” opportunities – which is the key theme of our Presidency and this Government’s top priority.
There was speculation about the future energy mix and the use of technologies yet to be invented. The likelihood that the energy sector will be transformed over the next 10 years, as the IT and telecoms sectors have been transformed, is exciting. To see children today tweeting, face-timing, gaming, as if “it was always like this” is quite astonishing. If technology’s impact on energy is even half as great, we are in for big change, better performance and, most importantly, consumer empowerment.
Reference was also made here at yesterday’s energy discussion to the need for massive investment; for clarity on post-2020 targets; and for certainty around the Single Electricity Market. The need to clarify certain REFIT matters was also raised. I can assure you that I and my officials are seized of the importance of delivery on these and several other matters and of the need to provide the necessary clarity with all appropriate alacrity.
Finally, congratulations to the Chamber on a very successful first 18 months or so. This Chamber fills a gap and it has an important role to play. As well as the very valuable inputs that you can make in developing the British Irish economic space and business relations generally, I would also like to see the Chamber develop some on the ground engagement in support of both existing and potential exporters and investors.
I look forward to engaging with you further with in the course of this journey.