David Cameron LIVE: 'We need to deal with debts and go for growth'
By Rebecca Burn-Callander Monday, 21 November 2011
Speaking at today's CBI Annual Conference, Prime Minister David Cameron laid out a strategy for growth.
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David Cameron is back at the CBI Annual Conference. Today his focus is on export and competitiveness in the UK. He takes the stage fresh off a plane from Germany: 'I'm glad to be back from Berlin. Don't worry - I've left my bazooka behind,' he says.
Cameron knows that he needs to woo this audience. Packed with captains of industry from across the UK, these are the people the PM has to convince to stay in the UK and keep pumping taxes into the state. His address is standard political fare. First the bad news: 'We are well behind where we need to be,' Dave admits but quickly goes on to say that we are way ahead of many of our peers in the EU. 'Growth has stalled altogether in many EU countries,' he says. 'But in Britain, retail sales are up and our export performance has improved.' Well done, us.
Amid calls to increase borrowing to spur growth in the UK, Cameron is sticking to his guns: 'I am absolutely clear about the answer to the economy: deal with our debts and go for growth.' It is 'dangerously wrong' to borrow more money to spend our way out of recession, he says. 'We need a fundamental re-balancing of our economy.'
The hours closeted with Angela Merkel this morning show. While the PM stresses the importance of dealing with the eurozone crisis: 'Clearly the biggest immediate boost to British growth is a resolution to the eurozone crisis,' he chooses not to concentrate on the EU in his political game of 'pin the tail on the donkey'. 'I don't blame our ills only on the eurozone,' he says. 'Britain is outside the euro. No one else is responsible for our debt.'
And then we have the obligatory back-slapping: We acted to prevent crisis early; look at poor old Italy and the mess it's in; so many nations are now facing crippling austerity measures and political instablity - while we're sitting pretty. The PM insists that compared to some of our neighbours, the UK is in the sweet spot for growth.
Next, Cameron moves on to that age-old bugbear: lending. 'We need to keep up the pressure to get credit flowing to businesses again,' he says. But this is no bank-bashing adress. On the Project Merlin agreement, Cameron says: 'It's lent £157bn, 11% more than planned. Lending to SMEs is up 10% on the year' but Cameron admits it's still a 'nightmare' to borrow money and that 'credit for SMEs is still tight'. Many contradictions in a single statement; this is the nature of politics.
But for all his worries over borrowing, Dave does plan to loosen the purse strings a little. Hence this morning’s announcement on home loans. First time buyers will be able to get government (ie taxpayer) backed mortgages for up to 95% of the value of the property they wish to buy. ‘The lenders aren't lending, the builders aren't building and the buyers aren't buying,' he says. 'We are rewriting the planning rules so the housebuilding industry can grow. We will get the country building again.'
Hmm. As MT can tell, this looks like a pretty rum way of dealing with what everyone – PM included - recognises as the real problem. It’s supply not demand – there simply aren’t enough houses to go round in the UK, and we are building fewer new ones than at any time since WWII. Driving up demand is at least as likely to prop up the prices of existing homes as it is to encourge the building of new ones...
On entrepreneurs: 'We need to give a massive boost to entrepreneurship. Britain must be the best place to do business.' Cameron insists that we are in the process of 'mass deregulation'. He explains: 'We are cutting the time it takes to set up a business, cutting corporation tax to 23% - the lowest in the G20.'
On inward investment: 'We are investing in our ports, investing in our wind electricity industry. I am personally getting companies like Siemans to come and invest in Britain. Tech City has gone from 30 to 60 businesses in just two years.' He cites the Centrica deal as a real coup for our economy.
On public procurement: Goverment will become easier to sell to - the cost of biding for contracts will be slashed. As it stands, SMEs win just 6% of procurement spending. It's 'an issue,' says the PM.
On exporting: 'I've taken delegations to China, India and Turkey,' says Cameron. 'That's my job. I'm proud to do it.' Exports to China are up 30%. While Turkey is a huge success story; exports are up 40%.
Our great leader rounds up with a call for help from the business community: 'If you've got specific asks, specific measures that you think will make a difference, tell us and we will make sure they go into the budget,' he says. 'I have no doubt that Britain can be a stronger, more prosperous nation.'
MT does have a specific ask. If the government wants to build houses, why not build houses? Offering to back mortgages will simply prop up house prices while the taxpayer takes the risk. A taxpayer that has already coughed up for the very banking sector that is now refusing to lend for mortgages. First time buyers will end up having to borrow even more than they do already and, contrary to Cameron's line on slashing 'vainglorious spending', this is precisely an example of spending for the sake of spending. Is this a desperate attempt to win votes? First-time buyers will be pleased - at least in the short term - and existing home-owners will see the value of their houses increase. It's a win on the popularity front, but good for business? MT doubts it.
Reporting live from the CBI Annual Conference
- BCC slashes growth forecast
- Eurobonds proposals cause friction among EU leaders
- 'Business is a diplomatic issue', says Hague
- CBI calls for gazelles to spring into action on £20bn plan
- An EU tax on British banks? Vince Cable says 'Nein!'
- Can exports still kick-start growth?
- Cameron and Clegg on 'all-out mission' to kick-start the UK economy