Diplomatic Cable

The UK’s Business Secretary Vince Cable (photo) will be visiting Romania this week. This is a follow-up to President Basescu’s visit to London in June when he agreed with David Cameron to strengthen commercial ties, and to join forces in Brussels to promote EU growth.

Vince Cable’s visit comes at a critical moment for the European economy and for Romania too. Romania has performed well in the economic crisis. The austerity measures have been hard, but the economy has remained stable and the country’s credit rating has reverted to investment grade. Why then has the IMF just revised its forecast for Romania’s economic growth down from 4.5% in 2012 to 3.5%? The answer lies beyond Romania’s borders. It is the severe strains in the global economy, and especially in the Eurozone, that make the prospects for Romania’s exports look less promising. A lack of growth in the rest of the EU – Romania’s main market – means a lack of growth in Romania too.

Vince Cable will bring the UK’s perspective to this debate in a keynote address at the National Bank in Bucharest. He has particular credentials to do so. In opposition he was one of the first, and one of the few, to predict the financial crisis of 2008. In government he has framed the UK’s response, reforming banking regulation, supporting new and small businesses, reducing the regulatory burden on employers, opening up new markets, creating new jobs. Britain is now the easiest place in Europe to set up a business.

And as we deal with the urgencies of the present crisis, we also need to keep an eye on the future. On current trends Europe will move down the league table of the big world economies until by 2050 there won’t be a single European economy in the top ten. Vince Cable will set out how we can keep Europe in the premier league, by playing to our strengths and making sure we can meet the new competition from Asia and South America.

He will also be looking at the investment opportunities in Romania for British companies. The last three years have been hard, but I have seen British investors stick with Romania, confident about the longer term. I have seen some companies enter the market for the first time, finding new opportunities here that have dried up in traditional markets. I have also been impressed that, despite the crisis, British companies have continued to employ Romania’s talented workers – in software, pharmaceuticals, financial services and telecommunications. Just this year, several hundred new jobs have been created by UK companies operating in Romania.

And the UK is also developing Romania’s human capital. Britain has four of the world’s top ten universities. The alumni group of Romanian graduates from Oxford and Cambridge Universities that I host on occasion grows bigger each year. More and more Romanians are choosing to study in the UK.

So the UK has a lot to offer Romania, and both countries – our politicians, diplomats, scientists and our businessmen – need to work together to respond to the crisis facing Europe today.