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Defeating terrorism would boost economy, says Blair

John Deane,Jane Merrick,Pa News
Monday 05 November 2001 01:00 GMT
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Defeating international terrorism would be a major victory for the economy, Tony Blair told Britain's business leaders today.

In a keynote address to the Confederation of British Industry conference in Birmingham, Mr Blair told delegates: "The effect of the 11th of September on world economic confidence, not to say on airline and tourist and other related industries, is there for all to see.

"And we know these people would commit further atrocities if they could.

"So winning the battle against international terrorism is to win for the economy too."

Mr Blair said: "Jobs and living standards, business and trade need us to defeat this terrorist menace.

"Each step towards that goal is a step of reassurance about our own way of life and our ability to protect it.

"However as you know well even before September 11 the world faced a more difficult economic climate. The US, the Japanese, the European economies were all slowing.

"Britain is not immune from such changes, though we are better placed than any other G7 country to weather them.

"The fundamentals of our economy are indeed strong, the strongest in fact they have been in a generation."

Mr Blair said inflation was the lowest across the European Union and Britain had had the longest sustained period of inflation since the 1960s.

He added interest rates were at their lowest for 40 years and unemployment was at its lowest level for 25 years, while Britain's employment was the highest out of any country in Europe.

"I think it's important to understand how we got this strong position," Mr Blair said.

"I think it's for two reasons essentially, that in the 1980s under the previous Government there were fundamental Labour market reforms which we have built on through the New Deal ...

"And as a result we have in the UK one of the most flexible labour markets anywhere.

"And then secondly there were if you like the macro-economic reforms of the late 1990s under this Government."

Mr Blair added: "We have tried to build a strong base in financial terms for business, through independence of the Bank of England, high financial discipline that has cut the deficit, and trying to reduce the cost of economic failure.

"In my judgment our task is to keep these reforms in place and then analyse and deal with the remaining structural and fundamental weaknesses of our economy.

"So for example on issues of employment and regulation, we have a minimum wage and fair rights at work, but there will be no dilution of our essentially flexible labour market.

"According to the OECD the UK is among the least regulated product and labour markets of any major industrialised country - and it will stay that way.

"There is one continuing reason as you know why last year the UK was the third largest recipient of inward investment - over 130 billion dollars in the world - and is and remains the leading location for companies in Europe.

"And to answer directly concerns that your Director General stated last week, yes there may be areas for example where employees are transferred to the private sector and they lose their pension rights, where we will look to improve the rights they have.

"But there will be no new round of employment legislation that takes us back to the 1970s, the basic settlement in the last Parliament will remain.

"And likewise we will not take risks with the hard-won macro-economic stability.

"Those fiscal reforms will stay. And they're not just right in themselves, I believe that they're vital to encourage the long-term investment that we need.

"If we can succeed in flattening as far as possible the swings of the economic cycle, then I think as you know business then has greater confidence in its ability to plan ahead and to invest."

The Prime Minister said there remained weaknesses in Britain's economy however, including productivity.

"Although there are many areas in which we do extremely well, the gap between us and our competitors remains worryingly large in other key areas."

He said the gap could only be filled in investment particularly in education, skills and technology.

Mr Blair added that education spending was rising every year as a proportion of national income, and 17,000 out of 25,000 schools had seen substantial capital improvements.

Mr Blair said the UK was already one of the most connected economies in the world, Internet use was higher than in any other European country and that the next challenge would be broadband technology.

He added: "We are in the early days of broadband but it has the potential to revolutionise many aspects of our lives."

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