It's terrific to be in Aberdeen again tonight for this first CBI Scotland North East Business Dinner. I have visited numerous hotels but never one opened by the last President of the Soviet Union - Mikhail Gorbachev.
Some of you may remember Gorbachev's visit in December 1993 to receive the Freedom of the City. It's a rare honour, afforded to only a few individuals or groups, including Winston Churchill, Nelson Mandela, the 4th Battalion of the Highlanders and another fiery Red, who has been in power for 23 years, Sir Alex Ferguson, longer than any British Prime Minister.
Gorbachev was a titan on the world stage, the architect of Glasnost (openness) and Perestroika (restructuring). But as Communism at that time proved incapable of change, one of the things that remained constant was the President's sense of humour.
When President Gorbachev was visiting London he was asked by a Financial Times journalist on how things were going in the Soviet Union at that time. His answer was a simple "very good". The journalist almost sensing that he needed a bit more for his story asked the President to perhaps expand on how things were going in the Soviet Union. Gorbachev looked at him quizzically and simply responded "Not very good".
The collapse of Communism and the break up of the Soviet Union broke Gorbachev.
When he visited Aberdeen it was midway between the two great peaks of UK oil production, the mid 1980s and late 1990s.
An era of economic growth had commenced which continued until 2008. It was sixteen consecutive years of growth across the UK.
But we are now enduring the first global recession of the post-Communist era.
An unprecedented international downturn
Tonight I want to talk about the unprecedented international economic downturn. Two things are clear.
Firstly, this is the first international recession induced by a global financial crisis. Economies have shrunk worldwide, output has dropped significantly.
Secondly, we in the UK cannot solve the problems ourselves. No one country can. Even President Obama's 800 billion dollar injection into the American economy comes with that health warning. No country can solve this on its own. The crisis started in the US but it cannot be solved by the US alone.
And it is also now clear just how close to collapse sections of the banking system came last autumn.
The enormous international flows of unregulated capital nearly sunk the global financial system. The toxic by-products of unrestrained investments burst to the surface.
Respected financial institutions, bedrocks of our Scottish business heritage for perhaps three centuries, headed towards the cliff edge.
As the market faced meltdown, the Government acted in the public interest. Savings and pensions were protected, a run on the banks was averted. In a context that doing nothing was not an option I want to be clears to each and every one of you that while the state is clearly taking on a greater role in the economy, it is not in the interventionist guise of the 1970s. Despite this colossal market failure, I still believe that we need markets when possible, government only when necessary.
It was necessary to invest £37 billion recapitalisation of the banks and £325 billion in the Asset Protection Scheme which will help to re-establish financial stability. This is not simply a loan to get the banks through a rough patch. It is about trying to engender confidence in financial markets.
The Chancellor's fiscal stimulus in November benefits the Scottish economy by £2 billion into the pockets and purses of Scots.
And by spending responsibly now, we reduce the impact of the downturn. Like President Obama we are taking a long term approach. But tough fiscal decisions will be needed to bring public borrowing back into balance. Many families and businesses in Scotland are looking to make savings and Government needs to do the same.
From 2010, £5 billion efficiencies will be made annually from total UK spending of over £600 billion. And we continue to hear comments from the Scottish Government and claims that they can't find these savings. I simply don't agree.
But over the next three years they will have over £100 billion. More than any Scottish Government before it.
The Scottish Government already has double the amount of money Donald Dewar had nine years ago when he was First Minister. They will also receive an additional billion from the UK Government in each of the next two years.
We all have to tighten our belts. There will be no opt-outs for the UK or Scottish governments.
It is important there is cooperation not just in the UK but also internationally.
International
We have looked closely at previous recessions and we are learning from the errors of the past. The danger is that global leaders learn the wrong lessons of history.
Throughout the 1930s countries hit by the depression turned inwards to regressive protectionism and global capital markets collapsed.
The Labour Chancellor of the time Philip Snowden's rigid budget orthodoxy did not deal with the slump of the early 1930s while the imposition of tariffs in the US only deepened the depression. Economic nationalism than and economic nationalism now will get us nowhere.
The Prime Minister is active on the world stage preparing the ground for the G20 summit meeting in London in early April.
At the recent EU summit in Berlin he underlined the need for international cooperation to inject greater confidence into the world economy.
Visiting Washington this week, and I spoke to the Prime Minister this morning, Gordon Brown became only the fifth Prime Minister to address a Joint Session of Congress where he outlined his vision of a new Global Deal.
The Global Deal sets out the plan for getting the global economy back on track. We are proposing a package of internationally coordinated measures to restore stability and set a course for sustained and sustainable development.
The Global Deal calls for legislation to close the regulatory loopholes and the reform of the international finance sector. We want a new global early warning system and enhanced powers for the IMF for two reasons. Firstly, to prevent a repeat of the financial crisis and, secondly, to instil the stability and confidence necessary for sustained recovery for the future.
Real Help Now
Moving closer to home than Washington or Berlin, we are determined to provide Real Help Now for people.
At Cabinet meetings, including the one this morning, what we are most driven by is how do we see small and medium businesses through the recession.
Small businesses play such a key role in Scotland¿s economy ¿ employing over half our workforce and accounting for 99% of our businesses. It is imperative that banks continue to actively support good and viable businesses.
We are trying to help businesses during these tough times and we know we have more to do. We are offering specific solutions ¿ not a blanket subsidy. The business support package announced in January is designed to address the cash flow, credit and capital needs of businesses.
The Working Capital Scheme is a direct response to the constraint on bank credit available for lending. Government will now provide banks with guarantees covering 50% of the risk on existing and new working capital portfolios. Through the new Enterprise Finance Guarantee, we will support up to £1.3 billion of bank loans to companies with a turnover of up to £25 million. The Capital for Enterprise Fund is a new £75 million fund to help viable small businesses with high levels of existing debt to raise long-term finance.
In an effort to boost demand we have also accelerated £40 billion of UK capital expenditure and we are determined that Scottish companies sign up to tender for UK public sector contracts on the Supply2.gov.uk website. It is essential that Scottish companies sign up for these UK-wide opportunities.
And the Business Payment Support Service helps businesses spread their tax payments over a timetable they can afford.
The Politics of Change
The recession is affecting so many areas of life and it is changing politics as well.
As a recent Scotsman editorial concluded: "This is a recession that is re-writing the rules for a generation."
I would go further. I believe that economics is changing politics.
Scots expect their politicians to work together in the downturn. The Prime Minister met the First Ministers of the three devolved administrations last week.
That's why I will be having more talks with the First Minister next week on the economy and this underlines the key role of CBI Scotland who are hosting this latest meeting. That's why I hosted talks with the Treasury and John Swinney on the Forth Road Crossing this week.
I want to make Scots' lives better. That explains my support for the Welfare Reform Bill, the Banking Bill and the Savings Gateway Accounts Bill. The message has to be clear - we will not be sidetracked from delivering a way through this recession.
No-one should put politics before country. Yet the perpetual drumbeat of the constitutional debate from the Scottish Government is not in tune with Scotland¿s expectations at this time.
Scots will never forgive those who push their divisive agenda at a time of economic crisis.
So you will have your own view and I have mine. But at a time like this being part of the UK does give Scotland greater security.
Scotland is a member of two Unions - the UK and the EU. They take most of our exports. We have top table seats on the UN Security Council and the G8.
I love Scotland too much to see it leave the UK. Being part of the world's fifth biggest economy is a major plus for us.
Our Future Prosperity
So despite the downturn it is important to say each and every day, not just to this audience but to the media as well, that Scotland still has plenty to promote, including four crucial sectors.
Firstly, energy. North Sea Oil and Gas has been a centre of excellence for nearly all of my life. My father worked on the rigs and I grew up with it as part of my family life.
As the hunt for fresh oil and gas reserves reaches more inhospitable places, the acknowledged expertise of our companies should be in ever greater demand across the globe.
The sector faces challenges but Scottish companies remain at the cutting edge of technological breakthroughs. The recent news of 400 new jobs at Global Energy is a another real boost.
We¿ve also witnessed extreme volatility on the oil market. Oil prices have crashed from over $150 per barrel in July 2008 to barely $40. Anticipated UK oil revenues have fallen by £6 billion - a fifth of the Scottish Government's total budget.
Of course, new fields are still being found, albeit smaller. Our geology will provide us with oil and gas for some time to come.
And our geography also allows us to exploit the burgeoning low carbon energy sector.
Our windswept coasts and moors and the tides around and between our islands, offer a vast new energy bonus and Scotland can reap an enormous benefit both by being an early adopter and leading the world.
Secondly, we are still a world leader in financial services. Fund values have tumbled but corporate knowledge does remain.
Edinburgh is the world's 9th biggest centre for fund management - a key financial hub with a rich reservoir of talent.
Our financial services are strong and diverse enough to weather the downturn.
Our financial institutions can compete for the range of products demanded by a growing global middle class ¿ this middle class across the planet - almost trebling from 430 million in 2000 to over 1 billion in the next two decades.
As these new economies establish their own financial services sector we can either educate them, train them or own them. Our objective should be all three and that is the task we should set ourselves.
Thirdly, Scotland remains strong in high-tech engineering. And our shipbuilding sector has secured significant additional work for the UK Ministry of Defence's aircraft carrier programme.
And fourthly, tourism offers wonderful opportunities. Scotland itself is our unique product. Eco-tourism was designed for Scotland¿s rugged beauty, wide open spaces and healthy air. And exceptional international experience, most notably New Zealand, highlights the opportunities available to Scotland
The year of Homecoming sees the Home of Golf host the Open Championship at Turnberry in July.
When President Gorbachev visited 16 years ago, Willie Miller occupied the Pittodrie hotseat. The Dons were no longer winning European trophies but Aberdeen was Europe's Oil Capital.
But, more importantly, for this audience as we reflect on the past but also examining the future and what will things look like in 16 years time, in 2025?
There will be a million green collar workers in the UK Aberdeen can be Europe's Energy Capital, transferring the technology developed through oil and gas into the renewable sector. The economy will be more knowledge-based, grounded in green-collar jobs, signifying sustainable economic growth.
The rise of China and India will continue unabated. By 2030, there will be 350 million more middle class Chinese - potential purchasers of Scottish products.
India, already the world's fourth largest economy in purchasing power parity terms, is expected to overtake the US by the mid-2030s.
Change is and will continue to be part of our global world. We can't stop globalisation. Despite the downturn we shouldn¿t try to. We must continue to exploit our undoubted strengths and again maximise the benefits of a global market.
Emerging from this recession will be far from easy.
But Scotland is at its strongest when we stand together. And we are in this together, Scotland, Wales, Northern Ireland and England; Government, businesses, workers, families and many others. We only get out of this crisis together. There is no greater priority. It's not a time for politics as normal in Scotland.
I look forward to working with CBI Scotland and as many of you as possible on this road to recovery.