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24 November 2005

Tony Blair has met with Angela Merkel for talks at Number 10, describing the relationship between Britain and Germany as ‘immensely important.’ Mrs Merkel took over as Chancellor earlier this week from Gerhard Schroder.

• PM welcomes Chancellor Merkel to Downing Street

Opening statements

Tony Blair:

Good afternoon, everyone.  Can I extend a very warm welcome indeed to the new German Chancellor and to say how delighted I am to see her here today in Downing Street.

We have got time for a couple of questions each for the German and for the UK press after a few opening remarks.

First of all of course we discussed the full range of issues as you might expect  including to do with Europe, where I made it clear that Britain would use its best endeavours to get a Budget deal at the December Council.  Obviously it is going to be difficult and tough and there is no point in going into details today but we will do our level best to try and reach an agreement.  We also discussed some of the outstanding portfolios for the European negotiations, issues  to do with the Services Directive and so on, issues that are outstanding and that we again will do our best to try to resolve. 

In addition to that we had a discussion on foreign policy and foreign policy issues including on Iran and Afghanistan.  I think what is very important is that for both our countries and also for the European Union we all face the challenge of economic globalisation.  It brings with it tremendous opportunities but it also brings with it insecurity and worries about the future. I think there is a very clear and common approach that the best way for us to meet the challenge of the future is for us to make sure that our economies are strong, precisely so that we can provide the right social solidarity for our citizens in the face of these challenges.

Obviously the read across to the reform programmes, both within in our own countries and in the European Union, is extremely important.  We had a very good discussion on these issues.  I look forward to seeing the Chancellor again in Barcelona and I believe that over the time to come we will have a very good and close working relationship, not just between our two countries but between ourselves.   Once again, thank you for coming here and being with us today.  It is a tremendous responsibility that you have taken on and we look forward to working with you to make it a great success for you and your country and for the European Union, so welcome.

Chancellor Merkel:

Thank you very much for your very warm welcome here in London.  I am very pleased that we had the opportunity today, on my second working day, to make this visit to London and with this visit I also want to underline that Germany, and the new German Federal Government, has a great interest in maintaining good friendly relations with France, but not just with France, but particularly also with the United Kingdom. In this respect we attach great importance to these relations, irrespective of the fact that the UK now has the Presidency of the Council. The Council in its last few days needs a lot of preparation and co-operation. 

We have had a very good discussion and I am pleased that the British Presidency, in view of all the decisions which are coming about in Europe, has unfolded many activities and has made proposals. I can promise that Germany, with the new Federal Government, will do everything possible to make Europe capable of acting.  Europe is in a complicated situation.  We have talked about important directives. 

The Prime Minister has pointed to REACH but also to the Services Directive and also to the Working Time Directive.  In all those areas we are really in a very intensive discussion and I would say that particularly in regards to the Chemicals Regulation we have hopes to make progress so that we can come to an agreement. I mentioned this Regulation in particular because it is symptomatic of the question as to whether Europe is preparing sufficiently for globalisation or whether we will have to pay for getting too much prosperity and competition. I would say that it is important that we can develop ourselves in competitiveness and it is important that we can be socially strong too. This is something which certainly has found great agreement between us.  Without economic strength, Europe will not be able to further maintain its social model and therefore the support of the US is important.

I am also very pleased that the British Presidency has the will to have progress in co-operating and looking at the Budget.  We are net payers in the European Union but I am glad that we can make progress there, and I am glad that the British Presidency will be furthering progress in this respect.

I am very grateful for the good atmosphere.  I was very pleased to have made such a good start, and have found a real good rapport and that we could begin our co-operation in governmental meetings which haven’t taken place since 1998. It would be nice if I could invite the Prime Minister to Germany after the UK Presidency.  Thank you.

Question and answer session

Question:

Two questions please.  One to the Chancellor.  In the great debate about the European Union Budget, do you support the position of France, or do you support the position of the United Kingdom?   And Prime Minister  ….

Tony Blair:

Do you mean after that first question we are actually going to allow you a second question.

Question:

Prime Minister, forgive us, it is quite an important issue.  Can you remind us why you remain of the view that the value of the British State Pension should remain linked to prices and not earnings.

Chancellor Merkel:

I can tell you that I am someone who supports results and success and this is why I support any success, any result in priority to anything else.

Tony Blair:

In respect of the pensions you know the Turner Report is going to be published shortly and we want to see the proposals that report makes.  Everybody knows there is an issue to do with how we balance the State provision and private saving for the future.  The very reason we asked Adair Turner to carry out this report was in order to see what the policy options and choices are and there will then be a very full debate and consultation upon them because we all want to see the best possible pension provision for the future.

The very reason we have asked for this report to be done is because we know the present situation has to change and that is precisely why we asked him to carry out the report and we will do it. Contrary to anything you may have seen in speculation earlier, I can assure that we all want to take his report and to consider it very carefully and to use that then as the basis for future discussions to get the right pension provision for the country so that people can have a proper standard of living in retirement and have that proper standard of living in a way which is also right and fair for the taxpayers that have to fund the State part of the provision. So that is the exercise which will be carried out and you will see the results in the next few days. There is not much point in me speculating on it or you until that happens. 

Chancellor Merkel:

I would be interested in this report as well.

Tony Blair:

You see.  I think we all face the same problem actually in every European country.

Question:

I have actually got a question for the Chancellor.  Many women in Germany are very excited about your taking up office as the first female Chancellor because they hope that equal rights for women in respect of economic and social rights will be much improved.  My question is how difficult is it as a woman to really assert herself in the typically male environment in Germany and also at the same time bring up a family and what in concrete terms will you be doing in Germany in order to improve the situation?

Chancellor Merkel:

Here I always say that it is very difficult to judge the difference between the male and female career because I have always been a woman.  And therefore I cannot judge this very precisely, but it is a fact that for example in none of our top industries we have a woman in power and those women who are there have studied but often have no children, and we will be trying to do something in the German economy which we have not done up to the present which is to say that in the first year of the life of a child, income transfer will be enacted so that women who earn more can get support and secondly better child-care possibilities and we will put the family, the household, within legislation so that social benefits will be anchored within the place of work. 

Then we also have to do some rethinking.  We have a very small window with regard to age.  Someone who hasn’t achieved the necessary promotion by the age of 40 doesn’t have it up to the age of 50.  Women do also have capacities, strength of flexibility, creativity, power of improvisation which is needed in the economy and I quite jokingly say that a man who has been sitting in an office for 40 years is not more flexible than a mother who has brought up children.

Question:

Chancellor, I wonder if I could ask you the same question, almost, but in a slightly different way.  Germany traditionally has been against the British rebate.  You think that we are a much richer country than we were in 1984.  But do you now accept the British argument that any surrender of the rebate should be tied into reform of agricultural policy, not least because we pay more than twice what the French pay into the European Union.

And Prime Minister, do you see the election of a new German Chancellor as an opportunity to change the nature of relationships within the European Union, in a way getting away from the Franco-German engine at the heart of Europe and perhaps taking more cognisance of Britain and of the new Eastern European countries.

And could I very quickly ask you, because we all want to know, have you seen the Turner Report.

Tony Blair:

I haven’t seen the actual final report yet but of course we have had meetings with Adair Turner and his Commission and so have the relevant Ministers in Government, but I just say to you it is absolutely clear, we will take the report and we will use it as a basis of a discussion and of course we want to have the best possible pension provision for the future. At the same time make it one that is affordable in respect of the State provision for the taxpayers that fund it.  I am afraid that doesn’t give you much of an answer at the moment but that is because we should let the report speak for itself. 

But the basic challenge that we have, and all countries have, is that you have got an ageing population and more people of retirement age.  At the same time there are fewer people of working age.  People need to be able to save for their retirement in a way that is fair and the State has a certain obligation.  Now how you balance the State obligation and private provision that is the very question, and it has got to be done in a way that is fair, in a way that provides a decent income in retirement, but in a way that is also fair to the taxpayer that will have to fund the State part of it.  So I think that is the basic part.

Now, in respect of the relationships inside Europe.  France and Germany have had, and always will have, a strong relationship, and that is in the interests of Europe.  In a Europe of 25 of course, however, all countries will have different sets of relationships within the European Union.  I have always expressed the view, and express it again now, that it is important for Britain and France to work closely together and of course our relationship with Germany is immensely important too.  In the end the whole point about the European Union is that we benefit if we are working together. 

In these challenges of economic change, it is in Britain’s interests that Europe meets them together because then the British economy is stronger and the standard of living of British people is higher.  So  over the years this has been a very familiar argument which is to push all countries into choices about who they have as partners and who they don’t.  But it genuinely should not be like that because Europe, especially at 25, will only work if the countries, and in particular the major countries within Europe work closely together and I think there is every chance that that will happen.

Chancellor Merkel:

The big opportunity for a unified Europe within the meaning of the market is also conditioned by the fact that we can defend our common interests outside Europe, for instance in the Asiatic area. That presupposes also that irrespective of our national interests we can bring our international interests together and that the countries of Europe have to co-operate.  That is quite clear to me.  Germany and France have a very long European tradition.  They often were the engines of European development.  This doesn’t go against Britain.  From my point of view it is also desirable that it goes together with Britain.  Besides this Germany is a country which has many neighbours, very small countries too. The experience is that Germany has defended Europe as well if it has defended the interests of small countries, and not raised the impression that because it is a big economy it ignores the small ones.  I don’t hold much of the theory that the big ones have to call the tune, the small countries belong to this as well. It is in our interests if we want to keep our prosperity and our social achievements that we defend our interests together, and this doesn’t happen without Britain, at least not according to me.

In regards to the question from your neighbour it is a provocative one.  I want to give the same answer again.   I want to have success and the situation of each country has to be taken into account.  If anybody forgets one country’s interests then you won’t get any success.

Question:

Chancellor, how do you estimate the chances of success that in December there will be a compromise in regard to the financial planning in the EU?

Chancellor Merkel:

I have found that with the great determination the British Presidency wants to make its contribution. I don’t really want to look into a crystal ball but we have three weeks left and I think everybody will make his or her contribution and then we will see.  We shouldn’t constantly talk about the question of possibilities.  The framework has been set up.  It is a complicated question to make a budgetary prediction and provision and yesterday my visit has shown too that no country should ask more than another and that is how it should be.