11 May 2018

  |  CBI Scotland

Speech

CBI President Paul Drechsler speech to Scotland annual dinner 2018

Speaking today at the Principal Hotel, Charlotte Square, Edinburgh

CBI President Paul Drechsler speech to Scotland annual dinner 2018

Thank you for that great reception.

It's a pleasure to be here in Edinburgh.

Particularly as this is my final speech in Scotland as CBI President.

This is something of a farewell tour.

So I get to enjoy the food, drink the wine and say all the things I’m not supposed to say.

I think that’s how it works.

All jokes aside, coming to Edinburgh can feel a bit like a homecoming for an Irishman.

The Scots and the Irish are kindred spirits.

“Spirits” often being the operative word.

But there’s a real sense of two peoples united in their global perspective.

Outward looking.

Keen to improve their situation.

Bold enough to seek opportunities beyond their own borders.

In short, peoples with a pioneering spirit.

But I’m not here to talk to you about Ireland.

I don’t want to be another Irishman coming to Scotland to tell you how it’s done.

That’s what the Six Nations is for.

 

All jokes aside…

…this is about what we can all do together…

…to help Scotland realise it’s undoubted economic potential.

They’re the reflections of someone who has spent a career outside of London.

In Liverpool, Teesside and overseas.

Someone who has both championed Scottish business…

…and had to compete with it.

Let me tell you now…

Scotland can be a force to be reckoned with.

World-class universities.

Oil, gas and renewables.

Life sciences and video games.

 

I could go on.

But the point is.

Scotland is very well perceived in the global economy.

But there’s so much more to offer.

So I want to start with exports.

This is a place of inventors, innovators and entrepreneurs.

The exporting champions of whiskey and salmon.

Scottish companies are doing amazing things in global markets.

Many are here in the room with us this afternoon.

But there’s definitely more we can do.

Scotland’s exporting potential is huge.

So how do we make the most of it?

Yes, Scotland exports more whiskey than anywhere in the world.

Yes, Scottish salmon is Heathrow’s biggest export.

And yes, this makes for a fantastic supper.

But simply exporting whiskey and salmon isn’t enough.

 

As the First Minister is fond of saying:

“Just 70 companies are responsible for half of Scotland’s exports.”

That’s an interesting statistic.

It suggests we’ve gone from a buccaneering Scotland…

…To one which seems a little cut off from the world.

But that’s not the case.

Scotland continues to look outwards.

To seek new and exciting opportunities abroad.

And in a booming global economy, that’s the right thing to do.

So how can we ensure that more Scottish companies benefit?

We know that exporting gives a massive boost to productivity.

And that companies that export more, tend to be more productive.

But we should also know consider that more productive companies give more back.

And that’s good for everyone.

It’s a virtuous cycle.

And one that can really benefit the Scottish economy.

So, we need to find out what’s holding firms back.

Is it inexperience?

Risk aversion?

Structural barriers?

The answer is a combination of all three.

And unfortunately, it’s holding a lot of firms back.

So many that 70 companies are doing half of Scotland’s exports.

So what can we do to help the next 70 firms on that list?

What we shouldn’t do is turn our back on our closest trading partners.

 

That means the UK.

And it means the EU.

Scotland’s exports are worth £79 billion.

£50 billion of that goes to the rest of the UK.

And with exports worth over £12 billion.

The EU remains Scotland’s largest global trading partner.  

I think you know what’s coming.

We couldn’t go a whole speech and not mention Brexit.

As you all know, I was a shy and retiring ‘Remainer’.

But this isn’t about the CBI trying to turn the clock back.

Business is committed to making a success of Brexit.

And our job is to say, loudly and clearly, what making a success looks like.

And what success actually looks like…

…is what the government has already said it wants to achieve.

Frictionless trade with the EU.

Regulatory certainty.

Zero tariffs, zero quotas.

Increased trade with the rest of the world.

There’s not a business in this room that would disagree with that.

But we need to get beyond intentions and into detail.

We need to take bold decisions and deliver on them.

When the UK government makes those critical decisions…

…the evidence must come first.

So what does the evidence say?

First, that we must prioritise our relationship with the EU.

48% of our export goods go to the EU.

78% of our exporters sell into the EU.

Protecting that trade has to be our number one priority.

Even if we signed Free Trade Agreements with the USA, Canada, Australia and New Zealand tomorrow…

…it would account for less than 3% of our total trade in goods and services.

To do the same with Brazil, Russia, India and China would achieve even less.

Just 2%.

Second, the evidence says we can do both.

We can trade with the EU and with the rest of the world.

Germany already does 4.7 times more trade with China than we do.

That’s without a free trade deal.

 

And from within a customs union.  

We don’t need to cast aside established EU partners for potential riches beyond.

What we do need is a better solution.

One that fulfils the Government’s own objectives of frictionless trade and no Irish border.

Third – and finally – the evidence says that there’s also far more to trade than Free Trade Agreements.

There’s plenty we can do to improve trade right now.

Direct flights, trade missions and improving export finance.

And that’s just for starters.

Whereas if we lose access to the single market…

…it could reduce UK trade by up to 30%.

All the evidence suggests that being in some form of customs union with the EU…

…alongside a deep relationship with the single market…

…is the best thing for business.

 

That’s evidence, not ideology.

But fair warning.

If we do move onto negotiating new trade deals…

…we need to be clear on what we’re getting.

In 1971, it was made illegal to import haggis into the US because of a ban on sheep lung.

A scandalous situation that must be addressed.

The government needs to go in there with a firm position.

“It’s haggis or we don’t play ball.”

But jokes aside, this is serious.

We need the three D’s on Brexit.

That’s decisions, detail and delivery.

And the best way to get that…

…is for the government listen to the voice of business…

…here in Scotland as much as in the rest of the UK.

 

Speaking of voices.

One of the most powerful voices of my generation Nelson Mandela once said:

"Education is the most powerful weapon you can use to change the world."

Scotland knows that better than anyone.

There’s probably no better example of what education can achieve than Scotland.

The enlightened thinking that took place here shaped the world for centuries to come.

Hume, Smith, Watt.

Pioneering women like Mary Fairfax-Somerville.

Even the square we stand in today was designed by an Enlightenment architect.

Robert Adam.  

 

Nowhere else has so many world class universities in such close proximity.

But these assets need nurturing and protecting.

There’s now a question mark hanging over Scottish education.

Universities are telling us they’re starting to struggle to attract overseas talent.

And schools are falling down the league tables for maths, reading and science.

This should not be happening.

With spending per pupil among the highest in the world.

Scotland should be producing a workforce that can rival anywhere on earth.

A workforce that’s primed to create a high-tech, high-growth Scotland.

We have the students.

I know. I’ve met them.

They’re eager, tech-savvy, and ready to hit the ground running.

But that’s a lot to put on their shoulders alone.

That’s why we need to attract talent from overseas too.

Now immigration sounds complex. But is in fact simple.

We need an immigration system that does three things.

That one: protects the integrity of the UK market.

That two: gives Scotland the flexibility it needs.

 

And that three: sends a clear message that Britain is open for business.

Now of course, a good education system relies on more than sound immigration policy.

It’s also about innovation.

But again, look who I’m talking to.

Without Scottish innovators, we wouldn’t have the refrigerator, the toaster, the flushing toilet.

Or, my favourite, the digestive biscuit.

Innovation is at the heart of progress.

Whether it’s economic, social or cultural.

It doesn’t have to be complex either.

It could be a simple as adopting better technology.

Or training managers to get the best out of their staff.

It’s all about being creative and open to change.

Seizing new opportunities wherever they arise.

Scotland has a great innovation ecosystem.

It has the potential to become world-class.

But it could just as easily fall behind.

Scotland spent just 1.45% of GDP on R&D in 2015.

That’s less than the rest of the UK.

 

The CBI has campaigned to increase that target.

But even with that in place.

More needs to be done.

Scotland’s universities are a cracking example of what Scottish education can achieve.

Let’s make them as good as they can be.

And then let’s not stop there.

Schools, innovation, and immigration.

On all these crucial questions, let’s make sure we’re giving the right answers.

And ensure that Scotland’s pupils and students get the top marks they deserve.

Now a final word on another great Scottish legacy: engineering.

From lighthouses to ships…

…Scots have always come up with ingenious solutions to the great challenges of the age.

While the Cutty Sark may live in Greenwich…

…Scots know it was built in Dumbarton – on the Clyde.

But now we need that know-how to be applied at home.

We need modern day infrastructure…

 

…to rival the legacy of Stevenson and Telford.

The Queensferry Crossing made a bold statement.

But it can’t just be individual projects.

We need a big vision.

A vision of what the next generation of infrastructure looks like.

The CBI wanted to find out what that should look like.

So we asked our members what they want. 

The answer came back: digital infrastructure.

Nine in ten firms see digital networks as crucial to securing investment.

That’s why we support the Scottish government’s plan to make superfast broadband universal by 2021.

 

Ambitious, yes – but absolutely necessary.

Because connectivity isn’t just about computer speeds.

It’s fundamental to how people live their lives.

How people run their businesses.

And that makes it fundamental to us at the CBI.

So we’re looking forward to working hard to get it.

190,000 businesses.

And the Scottish government.

An unlikely but broad band of brothers.

Together, we can make Scotland’s economy…

…stronger, fairer and better connected.

Together, we can help Scotland change the world.

I’d like to finish with a reflection on why I came here today.

 

And answer the question:

‘Why should businesses invest in this part of the world?’

Of course, the answer is simple.

This is a fantastic, forward-looking country.

A country of great pioneers, of great teachers, and yes of great business-people.

 

When the Scottish enlightenment met the industrial revolution…

…intellect and commercial might combined to shape the global economy.

We need that power of collaboration today.

It’s time to recapture that pioneering spirit.

And challenge ourselves to do better.

And better.

And better.

It isn’t always easy.

But the size of the prize is worth it.

 

But as I stand here today…

…I am hugely optimistic about Scotland’s potential.

There no doubt in my mind that with…

…the right decisions from government…

…the right partnership with business…

…and the right economic conditions…

…we can secure growth, jobs and prosperity…

…for generations to come.

 

Thank you.