I am delighted to join you this afternoon. I am particularly pleased to be sharing the podium with Jan Muehlfeit, Chairman of Microsoft Europe. We are very enthusiastic about the success of Microsoft's operations in Ireland since you initially established with us in 1985. It is a relationship which has come a very long way since then, and which I hope can continue to go from strength to strength into the future.
Global Economic Crisis
We are living through a period of economic crisis which will have profound implications for every country. Globalisation of financial markets and trade flows means that the pace, scale and scope of the economic downturn is without historic precedent.
Every day brings new information about the impact of the crisis on different countries, markets and companies. Projections for economic growth are being revised downwards on a daily basis. While we can be confident that the World economy will recover, few would claim to be able to predict the timing and nature of that recovery with any certainty.
We can be certain that the crisis will have a major impact on global financial regulation and institutions. These issues are being actively discussed at European Union and G20 level at the moment and the progress being made should help to restore confidence. Personally, I have no doubt, having met on Tuesday with President Obama, that the shared determination which is necessary for us to get our intertwined economies back on track is present on both sides of the Atlantic.
Impact on Ireland
As a small open economy accounting for around 1.8% of Eurozone output, Ireland is particularly exposed to these developments.
The combined value of our imports and exports is equivalent to around 150% of national output - amongst the highest shares in developed world. Exports of goods and services alone represent around four fifths of our national output, which is over double the EU average, and means our fortunes are inextricably linked with those of global and European markets.
The impact on Ireland has been sharper by virtue of our rapid growth over the past decade and a half. The global downturn has greatly exacerbated the unwinding of a construction boom in the last few years, with consequent job losses and declines in tax revenue. Ireland's position has also been particularly affected by the recent fall in the value of Sterling relative to the euro, which has worsened the competitive position of Irish industry.
Ireland's Response
Like countries across the globe, Ireland is adjusting to these unprecedented circumstances, adapting our response flexibly to address developments as they occur.
The four corner stones of the Government's strategy are:
- stabilising the banking system in order to restore credibility, confidence and get credit flowing;
- reducing the gap in our public finances by increasing revenue and cutting spending, in a planned way, over the next 5 years;
- protecting jobs and restoring competitiveness to the way we do business, supporting viable but vulnerable enterprises; and
- investing in those who have lost their jobs so that they can return to work as soon as possible.
Our approach is consistent with, and informed by, both the Lisbon Strategy for Jobs and Growth and the European Economic Recovery Plan.
'Smart Economy'
All these actions are being taken with a clear focus on ensuring that Ireland repositions itself to benefit when the world economy does recover.
We want to ensure that we use the crisis to restructure and reform in a manner which improves our prospects for sustainable medium-term growth based on higher productivity.
In December, the Government published a Framework for Sustainable Economic Renewal which is based on the concept of the Smart Economy.
The Smart Economy recognises the interdependence between four types of capital which will drive economic and social progress in the future:
- human capital: the skills, knowledge and creativity of people
- physical capital: the stock of infrastructure used to produce goods and services
- natural or environmental capital: natural assets and the quality of the surrounding environment within which people live and work, and
- social capital: the networks, connections, mutual trust and shared values of the population.
The Smart Economy will have:
a critical mass of companies - both Irish and international - at the forefront of innovation, creating the products and services of tomorrow;
a highly educated, innovative and entrepreneurial workforce;
an environment where entrepreneurs from anywhere in the world will want to come because it provides the best environment for the commercialisation of leading-edge products and services;
highly favourable business supports, tax regime and infrastructural supports;
state agencies and institutions which are aligned to create competitive advantage for their clients in innovation enterprise.
And all of this supported by a public service that is citizen-centred and pro-business.
Almost 1,000 overseas companies have already chosen to invest in Ireland as their European base and are involved in a wide range of activities in sectors as diverse as engineering, information communications technologies, pharmaceuticals, medical technologies, GreenTech, and financial and international services. We also have hundreds of thriving R&D-intensive indigenous companies.
TCD-UCD Innovation Alliance
A key component of our vision for the Smart Economy is to use this base to build the 'ideas' component of the economy - innovation through the commercialisation of research and knowledge.
Last week I launched a major new initiative whereby Ireland's two largest and highest ranked universities - Trinity College Dublin and University College Dublin - have joined together to form an Innovation Alliance.
This radical new step involves a new fourth level Innovation Academy creating critical mass in science, engineering and technology research. Innovation will be mainstreamed as a core part of the university mandate, alongside education and research.
As part of this initiative, the two Universities are also establishing a Joint Venture in enterprise development which will provide new stronger mechanisms for technology transfer and enterprise support. We are putting in place an Innovation Taskforce to support this initiative and ensure we have a world-class ecosystem for innovation which will drive commercialisation and enterprise development.
Our vision is to make Ireland the location of choice for people with ideas they want to develop and commercialise.
Last year we already introduced a range of incentives to encourage an intensification of investment by companies in high-value research and development activities, to assist start-up innovative companies, and to enhance the availability of seed capital so needed by those wishing to scale their companies.
Further measures are being introduced to improve the availability of venture capital and the environment for the use and management of intellectual property.
It is particularly welcome that the Microsoft BizSpark programme is driven also by recognition of the unique and significant role that start-ups can play in helping to stimulate and drive an economy. There have never been greater opportunities to develop innovative technologies and solutions that can successfully address the needs of local and global markets alike - we need to pursue new and innovative approaches.
'Green Economy'
The Smart Economy is also a 'Green Economy' in that it achieves greater output for fewer inputs and results in a lower reliance on natural resources to drive economic growth.
Putting energy efficiency at the heart of this strategy will protect us from the inevitable rise in the cost of energy 'inputs' and the pollution 'outputs' from our economic activity. We are already reallocating investment towards energy efficiency improvements and have set ambitious targets for renewable energy.
Like other countries we see real opportunities in green enterprise. We also see great opportunities for Ireland's food industry, based on high environmental and quality standards and new product development.
International Services
While manufacturing will remain a core part of Ireland's economy, and an essential component of the wider research and innovation ecosystem, we also see great opportunities in growing international services.
Ireland is already an important location within the EU for a number of distinct service sectors, namely computer software, IT services, international financial services and regional services headquarters.
We know that clusters and concentrations of activity have a positive impact on services innovation activity and our enterprise and innovation policies have encouraged world-class companies to prosper and innovate alongside locally based enterprises.
It is estimated that implementation of the EU Directive on Services in the Internal Market could increase trade in commercial services by as much as 30 per cent. These are opportunities we can grasp by positioning Ireland as a competitive location for Internationally Traded Services.
As well as existing strengths, we are pursuing a range of new opportunities for Ireland in international services including education services, the maritime sector (e.g. ship management and financing), arbitration services and digital trade facilitation.
European Union
While I am delighted to be here with you at Microsoft today, my main purpose in Brussels is of course attending the European Council later this afternoon. I have spoken earlier of the international nature of the current crisis which confronts all Member States to one degree or another.
For a relatively small nation such as Ireland, membership of the Union and the euro greatly strengthen us at a time when immense forces are at play.
Since we joined in 1973 we have always taken pride in our contribution to the development of the Union's structures, and we have repeatedly witnessed the Union develop and implement fair, effective and transparent mechanisms to both facilitate and order economic activity, while at the same time demonstrating sufficient flexibility to accommodate the differences and, sometimes, peculiarities of Member States.
Part of our focus in the coming days will be on the implementation of the Economic Recovery Plan and I look forward to progress on that. Europe is making real progress - it is important we make more. To take one relevant example, we must see further integration of the Union's energy market if the potential of the green economy I spoke of earlier is to be realised.
It is often noted that our union has the most developed international governance structures in the world. But that world shows no signs of standing still. The Union's strength and dynamism is the fruit of the institutions and structures such as the internal market or the euro, put in place over decades.
Much attention has been focused on Ireland's rejection of the Lisbon Treaty last June. The core of the Treaty is the modernisation of the Union to take account of changes both within Europe and in Europe's relationships with the wider world. The entry into force of the Treaty is required to equip Europe with the tools to continue delivering what we ask of it. Ireland needs a Europe that functions well and adapts to changing circumstances - that is why we need the Lisbon Treaty. That is why we will be sparing no effort later this year in explaining the Treaty to the public and endeavouring to persuade them that it is overwhelmingly in our interests.
Conclusion
In conclusion, I want to acknowledge Paul Rellis, head of Microsoft Ireland, for the contribution he has made and continues to make in Ireland over and beyond his role for Microsoft, and also the excellent work put into today's event by Terry Landers. I want to thank also Ambassadors Brian Nason and Bobby McDonagh and their respective teams in a very busy week.
I have given you a quick overview of the Irish Government's strategy for delivering a new phase of economic growth based on the concept of the Smart Economy. My officials would be delighted to provide any further information or background material.
Of course, our focus on this agenda does not blind us to the immediate and difficult challenges Ireland, like other countries, faces in stabilising the economy and managing through the crisis.
In fact, we see the crisis as the time to make the decisions and investments which will ensure that we emerge stronger and better positioned to prosper in the years ahead. And we are determined to do just that.
Ladies and gentlemen, a week which I began by leading a trade mission from Ireland to the United States and meeting with President Obama, and which continues here in Brussels with a meeting of the European Council, serves as a perfect reminder of how the world is increasingly a global village. Whether it be Irish and European companies exporting their goods and services across the globe, or major international companies - like Microsoft - investing in Europe and Ireland, above all it is the winds of open international trade that will breathe life back into the global economy. Ireland is determined to play its part. Ireland is, truly, open for business.
ENDS