Peter Mandelson: Creativity is what sets London apart from the rest

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In the modern European economy we trade in ideas. That is our USP. The European economy is still very good at making things – every bit as good as China, or anywhere else.

Europe has a €162bn manufacturing trade surplus , so don't believe those who say we're finished. But what sets those things apart is the ideas behind them, the sophistication of the content and the intelligent processes that produce them. The creative capital, if you like. That's our comparative advantage.

Over the last couple of years Europe has accounted for about 20 per cent of global markets for high-tech goods and about 30 per cent of high-value goods. We have done a much better job than the US and Japan in retaining market share in a very competitive global economy. The key to that is creative capital and how we use it. In 2007, about 70 per cent of European imports were intermediate products, destined for the "transformation industries" here. The design and creative industries matter so much precisely because they are where that value is being added.

They are providing not just the patented ideas – the blueprints if you like – but the aesthetic and creative touches that are what differentiate a great product from a good product. And nobody does it better than London, which is a magnet for creative talent from around the world and a global hub for the creative industries.

The key to European prosperity in this century will be how well we nurture those industries and the services and manufacturing activity that they power. That's why it matters so much that the European economy stays open to goods, people and ideas and why we need to keep opening new global markets to our exporters.

We're not going to do that from behind high tariff walls of our own which is why, as Trade Commissioner, I will push back against those protectionists until my last day in the job.

A couple of years ago my work took me to a Milan menswear show – it's a tough job, but someone's got to do it. After the show I was talking to the designers about China, and the impact of China's manufacturing strength on industries like textiles in Europe.

One of them said: "Things are changing, and it's going to be difficult. We are going to have to do things differently.

"But, you know, the words Made in Italy communicate something real to people about style, quality and integrity. And while they do that, we'll be ok."

The same ambition and confidence in London and Britain is on display here, and it's great to see. Made in London and the UK is a brand we're rightly proud of. A healthy design industry is absolutely key to that.

Peter Mandelson is the EU trade Commissioner. He was speaking at the opening reception of the London Design Festival