My Lord Mayor, my late Lord Mayor, Your Excellencies, My Lords, Ladies and Gentlemen,
Congratulations on the way you have proposed the toast, and on your theme of hope, faith and charity. I note that the charity must reside with you; and the faith, of course, with the Robert RuncieArchbishop; which means that the hope resides in me. I am happy you feel that way about it—so do I!
Congratulations also on assuming your high office—an office in a city full of history and tradition—an office in which it is a privilege to serve. Yours is an office far older than mine: [end p1]
Indeed I am the newcomer here. I am but the 48th Prime Minister (although I prefer to think of myself as the 71st First Lord of the Treasury); you, My Lord Archbishop, can claim a somewhat longer lineage as the 102nd Archbishop of Canterbury; exactly half as many predecessors as you Lord HailshamLord Chancellor. But, My Lord Mayor, you are the 654th: you win the jackpot. [end p2]
May I also congratulate your predecessor on a year of achievement, on upholding the values of the City's institutions, and on blazoning them far beyond our shores.
You refered, My Lord Mayor, to courage, wisdom and integrity—particularly in dealing with financial matters. The Ancient Romans, I believe, thought there was another criterion which should apply to those who could be entrusted with looking after their financial affairs. That was the criterion of being female. Yes: they set their mint in the temple, not of a god, but of a goddess. [end p3]
They believed that the means of exchange involved relating values to one another, which no male could be trusted to manage properly. Men have, of course, come a long way since then.
In this Hall a hundred years ago almost to the day, Lord Mayor, one of my predecessors was responding to a toast proposed by one of yours. After complaining at considerable length about his difficulties with the House of Commons, Gladstone praised the City institutions.
He went on to speak about Ireland, and you will not be surprised if I start by speaking of Northern Ireland. [end p4]
In the last few days, My Lord Mayor, we have been appalled by a series of brutal crimes. On Saturday in Belfast a group of IRA thugs gunned down an elected Robert BradfordMember of Parliament within ear-shot of a room full of terrified children. The casual slaughter of the caretaker, as the murderers fled, underlines the horror.
Only chance prevented another tragedy here in London on Friday evening and we are all delighted to see the Attorney-General Sir Michael Havers and Lady Havers with us this evening.
I want to make three points. [end p5]
First: neither as individuals, nor as a Government, will Her Majesty's Ministers, on whose behalf I am speaking here tonight—allow themselves to be intimidated or deflected in any way by these events.
Second: the people of Northern Ireland must not fall into the trap being set for them by the extremists. The cynical and evil men who lead the IRA want to goad outraged citizens to take the law into their own hands.
There are those who might allow themselves to be provoked in this way: they must not give the IRA that satisfaction. [end p6] It is the task of the police and the army to fight terrorism; and we all applaud their courage in defending us all. We have never concealed the fact that there would be set-backs. But the security forces have achieved great success and they will achieve more. I repeat tonight an assurance that I have given before: the Government will back them to the utmost.
My third point flows from the second. Beginning of section checked against BBC Radio News Report 2200 16 November 1981
Progress will only be made in Northern Ireland if both communities refuse to support or shelter the gunmen. [end p7] The Government will not falter in its search for a peaceful solution, but if the Protestant and Catholic communities choose to take arms against each other rather than to work together, the future will be dark. Revenge is no policy. Hatred gives birth only to hatred. Reconciliation is the path to peace and that is the path which this government will continue to pursue. End of section checked against BBC Radio News Report 2200 16 November 1981.
ONE NATION—ONE WORLD
Lord Mayor, the City of London is a precious national asset. The practical wisdom which you have accumulated by trading in the markets of the world is a surer guide to our understanding of finance and trade than any amount of economic theory. [end p8] Your confidence and co-operation are essential to any economic policy. Any Government which fails to recognise this, fails to understand our national interest.
Disraeli, who died just 100 years ago, spoke of “One Nation” . The City, as a channel for capital, played a major part in linking together our regions, industries and commerce to create that nation. [end p9]
But the City's growth was also bound up with Britain's part in developing new lands in other continents. By the end of the 19th century the expansion of world trade, technological progress, and a revolution in communications, made it possible to speak of one world as well as one nation.
And today, more than ever, we live in “One World” . In this Guildhall this evening there are many who earn their daily bread, and perhaps a bottle or two of claret, in the great financial institutions of the City. In banking, finance and insurance, British is the best. [end p10] Yet it is not merely the standards of excellence of your services that has made Britain one of the great, perhaps the greatest, banking centre of the world. It is also that essential freedom for British banks to transact business wherever they will. The City of London and its incomparable financial services is envied by the rest of the world.
Of course we in Government cannot ensure that the pre-eminence of London will continue. That's up to you. [end p11] But what we can do is to make certain that you are not constrained by needless regulation. That we can and must do. Between us, I have every confidence that London will keep its premier position in the banking world.
In industry just as in capital markets there is “One World” . Moved by the invisible hand of competitive advantage, business enterprises now pay scant regard to national boundaries in their pursuit of efficient production. [end p12]
But even more, trade has been a great engine of post war growth. All have gained from the greater freedom of trade and payments.
Freer trade has meant lower prices, more competition and faster growth. And every consumer has benefitted. [end p13]
A DECADE OF CHANGE
So this age has been a great success story of the free market economy. But in the last decade this one world has faced a time of great change. The free industrial economies, the developing countries, and the regulated economies of Eastern Europe are all still grappling with the effects of that change.
Its origins go deep; but the 1970s were dominated by three things: persistent inflation, the oil price increase and great shifts in the pattern of world trade. [end p14]
By the beginning of the seventies, people had come to take it for granted that technology would produce an ever-growing supply of consumer goods; and that their standard of living would rise easily and endlessly.
Expectations ran ahead of reality. Politicians chose to finance the expectations rather than face the reality. The result was rising inflation.
That inflation in turn broke the system of fixed exchange rates. The stability we had come to take for granted collapsed. [end p15]
It was then that the first oil price increase struck. And more was to follow. An economy which had been based on oil at $2,00 a barrel had to adapt to oil at $34 a barrel.
And third, there was a fundamental change in the pattern of world trade. In addition to the sharper competition from Japan, products from the newly industrialised countries—Korea, Taiwan, Hong Kong—invaded world markets.
Their goods challenged ours both in our home and in our overseas markets. Exports had to be switched to newly rich OPEC countries like Saudi Arabia, Venezuela and the Gulf. [end p16]
My Lord Mayor, we feel these dramatic changes in Britain. The whole economy had to learn to live with sharply fluctuating exchange rates; with high interest rates; and with levels of unemployment we had hoped never to see again.
We were not alone in all this. The countries of Europe have experienced great difficulty in adjusting to these major changes. Old techniques fade away giving place to new. And old skills become unwanted leaving large numbers of jobless. The dole queues stretch all over Europe from Barrow to Brindisi. [end p17]
FREE SOCIETIES DO BETTER
My Lord Mayor, this is not a crisis of capitalism. Far from it. Every nation, East and West, North and South, rich and poor, has had to come to terms with these fundamental changes.
We have all been affected but we have responded differently. The free economies, despite all their difficulties, have been able to adapt more quickly and more effectively than the rigid economies of the East. [end p18]
In Eastern Europe, as well as in the Soviet Union, they have produced plans and regulations in abundance.
But they cannot produce sufficient goods to sustain their populations. Their countries are stricken with crippling shortages and endless queues. They narrowly restrict the import of goods just as they ban the import of ideas.
They hide their unemployment beneath a cloak of inefficiency. With all their people nominally at work, they are still unable to provide enough consumer goods, and sometimes not even enough food. [end p19]
Yes, of course, we have problems in Britain, serious problems, of which the worst is that three million of our people are unemployed. For them especially we must temper the sharpness of change. We must cushion them from its worst effects. And we must protect the most vulnerable from the extremes of the international climate. Yet we could do none of that by resorting to the restrictions of a siege economy.
Our future lies in the expansion of international trade. We have everything to gain from one world and nothing to hope for in isolation. [end p20]
What then is the lesson of the post-war success and of the hard changes of the 1970s? The lesson must be that it would be the utmost folly if, at this crucial time, we turned away from the freedom which has served the most successful countries of the world so well and for so long. That way would impoverish the British people. [end p21]
ADAPTABILITY, BUT WITHIN A FRAMEWORK OF RESPONSIBILITY
My Lord Mayor, we must hold fast to those principles that have been the foundation of all prosperous Societies. The disciplines which have long been practised in the family, and in private firms, should also be observed in Government.
So we shall not compromise our responsibility to provide a secure financial framework in which the free economy can flourish.
It would be unworthy to try to evade economic realities by endless public borrowing. [end p22]
It would not only be unworthy—it wouldn't work.
Bills have to be paid.
It is sometimes said that this Government has stuck to a rigid statistical plan regardless of the consequences. Well, anyone who says that simply hasn't looked at the facts. Every good general has a strategy, but of course his tactics have to change even while the battle rages.
I have to make clear our total determination to stick to our strategy. But like the General we shall be flexible in our tactics although our room for manoeuvre is limited. [end p23]
And we are not alone in adopting this strategy. In the United States, in Germany, in the Netherlands, in Scandinavia, in Switzerland, Governments have resolved to reduce public spending plans and curb Government borrowing.
At every international meeting—at the OECD, at the IMF, at the Economic Summit in Ottawa, at the European Council—there is a persistent, a constant, and a repeated message: that if we are to return to growth and stability we must tackle inflation, contain public deficits, and increase efficiency. [end p24]
We all have to adapt to change. None can hope to attain higher and higher standards of living by running ourselves deeper and deeper into debt. None can find sustainable jobs if we try to shield themselves from change.
Those who would oppose these policies propose a course of action which would lead Britain straight back to 1976. Then we were in such difficult straits that no-one would lend us any more either at home or abroad, then we were supplicants to the IMF. Now we have repaid virtually all our IMF debts. [end p25] Now our currency can be used by the IMF in its lendings to other countries in their time of need. That is the fitting position for Britain.
SIGNS OF HOPE
My Lord Mayor, I believe we can now begin to see some first signs of recovery in the United Kingdom. It is beginning to be clear that we passed the through of the recession in the middle of this year. Rising manufacturing output is evidence of this. A welcome message indeed. [end p26] Strong export performance in recent months is a tribute both to the way our companies are now competing, and to the efforts of management and workforce alike.
Increases in engineering and construction orders, in private sector housing construction, and in retail sales support this brightening picture.
Of course not all news is good news. The fall in the exchange rate is now working its way into prices but it should be only a short while before the downward trend of inflation is resumed. [end p27] And I'm happy to see that some of our most respected city commentators believe that “The Government is very much closer to being on track with its monetary policy than the press would have us believe” . Yet we must expect unemployment to take time to respond to improvements in output.
Now the important thing is that we do nothing to damage confidence in recovery. In particular, those of us in work must remember that excessive wage claims may not only put our own jobs at risk, but could reduce the chance of work for those who are now unemployed. [end p28] The twenty-three million who are employed ought never to forget the three million who are not.
A country in our situation must be competitive or face mounting unemployment.
One-third of our national product goes to exports, and at the same time we have to fight hard in our home market.
We are at last becoming more competitive. Don't throw it all away. [end p29]
My Lord Mayor, you start your term of office at a time in which Britain is beginning to see the signs of success. The City will play an important part in our resurgence. We have seen how the success of the free society has contrasted with the endemic failures of the rigid economies. We know that that story of success has been interrupted the world over by the fundamental changes which marked the Seventies.
Every nation on earth has been affected, so great has been the change. [end p30] We are indeed all in this battle together.
We are one world. None of us can opt out of that world and every one of us is affected by the decisions and policies of our neighbours.
No-one understands this more than the City of London. Your whole history has been the story of adventure. Of venturing throughout the world to carry British goods and to sell British services wherever a market could be found. For centuries the City has understood the meaning of one world. [end p31]
Yet there are those in our society who would cut us off from all our links: who would have us cower in isolation from our neighbours in Europe, from our allies in North America and from all those institutions which help to support the free world. We reject totally that attitude which would diminish Britain.
The free world—yes, if one world is to have any real meaning, it must find it in freedom. All our economic interests, all our moral and spiritual needs reach out for freedom. We are a sea-faring race, a race of merchants and empire builders. It is not our destiny to huddle together in these islands, protecting ourselves from the winds of change and competition. [end p32] And tied to our merchant venturing, has been our spirit—the free spirit—which has so marked our nation down the centuries.
My Lord Mayor, in overcoming the problems which face this country, we shall need to draw upon all the strengths of one nation. But even that will not be enough, for all our interests lead us towards the creation of one world. And everything which we have learnt and experienced makes us determined to work for one free world. That is our history. That is our destiny.