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Member of the European Commission responsible for Internal Market and Services
Making E urope an attractive place to do business
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Lunch hosted by Business for New Europe
London, 2 March 2010
I've had a very good start to my trip. It was only right that one of my first visits should be here in London. Because of the importance of the City of course – for the UK and European economy. But not only.
My job is above all about making the single market work . Financial services play an essential role. But it's much more than just the financial sector. And I'm glad to be here – in a country which supports the single market so strongly.
So I want to start by thanking Business for New Europe for this invitation, and Roland Rudd in particular, for the opportunity it gives us to meet.
As Foreign Minister during the French EU referendum in 2005, I know how tough it can be to explain the point of Europe – why it matters, what it offers. And that is why I admire you and your organisation for your engagement. And for bringing a balanced voice to a sometimes unbalanced debate.
So in that spirit, let me briefly set out my ideas and objectives for the next five years.
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1. My belief is that the Single Market is Europe's key asset for growth. But it needs new momentum.
It's worth taking a step back. In many ways, the single market is an amazing achievement . If its creators had fully known all it would entail to make it happen – they might have thought twice!
But we have made real progress. More choice for consumers. Lower prices . It's now easier for companies to operate across Europe. You can live and work wherever you want to.
But we all know there is still a long way to go. And that's why I want to give the single market a new momentum.
I want more – not less - internal market.
The single market is part of the solution, not the problem . Did you know that for a 1,000 euros worth of growth in a Member State, nearly 200 euros will end up benefiting another Member State via intra-EU trade?
So I am also looking forward to the conclusions of Mario Monti's report on the internal market. I am convinced his diagnosis will open up new, promising paths for progress.
Be reassured though that the principles of better regulation and evidence-based policy making will underpin everything I do – and I want to underline the importance I attach to this.
This leads me to my second point: I want to make…
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2. Europe: an attractive place to do business
I don’t want Europe to be a sub-contractor to other great powers. Europe must be at the top table. Leading, not lagging behind. Shaping the global economy. Not being shaped by it. With the best standards and business conditions in the world.
But we need to make it easier to do business in the EU – for our companies, and SMEs in particular. We need to keep attracting foreign investment.
That's why I will, in the first instance, focus my energies on full implementation of the Services Directive. This is a piece of legislation that opens up new possibilities for business across Europe. It means less red tape, it means more trade .
This is crucial to the UK, where services make up a substantial part of GDP. Across Europe, but especially here, Europe's future growth potential lies in services . We cannot afford to waste it. And there are new challenges: we have a long way to go to make it safe, reliable and easy to buy and sell online.
Innovation is at the heart of growth. But we need to value it more. And that's not easy when it still costs ten times more to patent your invention here than it does in the US.
How can we be competitive when that's the case?
I can tell you frankly, I really hope I'll be the last Commissioner who tries to finalise a deal on the European patent.
That's only part of the problem. We also need to get the framework right for intellectual property rights and public procurement.
Do you know that public procurement represents 17% of EU GDP? We need to make it easier for small businesses to tap into that market on a national or cross-border basis. A truly competitive European public procurement market is even more important given the huge increases in public sector deficits due to the crisis.
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3. Thirdly, we need to approach future growth differently: we need better corporate governance
Future growth needs to be greener, more equitable, and more sustainable.
And the single market needs to play its part in the new forms of growth that will assure our future.
It is up to us to create an environment with the right incentives.
No business can expect long term success if it ignores responsible and robust corporate governance rules.
We have already taken the first steps to strengthen our corporate governance framework with initiatives on pay. We need to tackle ill-conceived incentives that encourage excessive risk taking in financial institutions.
However, this is not enough. All players must be made responsible for the overall success, or indeed the failure, of their company .
Company directors must be encouraged to invest the time they need in the proper fulfilment of their function. We cannot afford, nor tolerate, incompetent people on boards of companies. In this context, I like the FSA's vetting process for non-executive candidates for public company boards of financial firms.
Challenging management, and building sound and successful strategies.
And asking the right questions.
This is of course true for financial institutions where business models are often very complex. But this principle should be valid for all quoted companies. I also believe boards need to be more diverse [so they better understand their staff and more importantly, their customers].
Governance is also about having the right checks and balances in place . I'm thinking here about the responsibility of shareholders.
Too often, shareholders have been too absent or inactive . Sir David Walker described this problem well in his recent report on corporate governance in UK banks.
We need shareholders to assume their responsibilities. And not only to look at making quick, short-term returns on their investment.
And maybe auditors should have a bigger role to play in the identification and reporting of dangerous risk-taking in the firms they audit.
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Ladies and gentlemen,
During these coming five years, I want to work with you to build a single market without barriers. A high performing, wealth-creating single market. A single market that relies on thriving entrepreneurship and responsibility, and a single market that is fair.
My door will always be open to you – your experience is invaluable.
We may not always agree on the detail, but I will be "a man you can do business with".
One final thought to leave you with. " Europe stands at a crossroads. We either go ahead - with resolution and determination - or we drop back, into mediocrity."
These are not my words, but they reflect what I feel. They are the words of the late British Commissioner, Lord Cockfield, twenty-five years ago. They appeared in the Conclusions of the "White Paper on the single market" which he wrote with Jacques Delors. This Paper set out the blueprint for the Single Market Programme which transformed Europe.
I believe Lord Cockfield's words are even more relevant today than they were in 1985. We need to have the courage to choose the right path – right now.
Thank you for your attention.