It is great to be here tonight and to have the privilege to speak at this dinner.
I want to talk about the UK's path out of recession and the road to recovery. Inverness is a particularly dynamic setting to highlight what we have done, why we did it and what we will do.
Inverness has continue to grow rapidly since its selection as Scotland's fifth city, and the most northerly in the UK, back in 2000. It is now the fastest growing city in western Europe, with the population expected to reach 100,000 by 2030.
Inverness has a diverse and vibrant economy based on a rich mix of traditional and new industries. But I know that the last year has been tough for this city and region, Scotland and for the wider UK.
Last September when you gathered at Nairn for your Highland and Islands Awards dinner and were addressed by James Smith of Shell, the storm clouds of irresponsibility and the failure of light touch regulations were gathering on the horizon.
We have since experienced a period of global instability which most of us have not seen before in our lives. The downturn started in the United States with the toxic debts arising from sub-prime mortgages but in our interlinked world of instant communications it soon spread quickly. Leading to an international collapse of confidence and global recession.
It has been over sixty years since we have seen the world economy being rocked as dramatically as the economic convulsions of recent months. In 2009 the world economy will contract. Across all OECD states output and exports will fall.
However, the situation is now beginning to stabilise. The economic outlook is stronger than earlier in the year. There is more good news about. And as confidence returns so growth will follow.
The Chancellor has forecast that the UK economy will start to grow again before the year's end. The Institute of Chartered Accountants are predicting a 0.5% rise in UK economic output during this third quarter of the year. They also reported last week that businesses were moving away from a defensive mindset and starting to consider 'careful growth'. I would be grateful to here your opinions on this in the Q&A.
Tonight I want to outline the action taken by the UK Government to support people and businesses through the downturn. It is a twin track approach with Real Help and Building Britain's Future at its core. And in conclusion I would like to look, with canny Scottish optimism, at the road to recovery.
The IMF said that the Government's bold, wide-ranging measures averted a banking collapse and contained the impact of the global economic crisis in the UK.
Centuries old Scottish financial institutions were moments from going over the cliff edge. Through the Government's recapitalisation and asset protection scheme the banks were pulled from the cliff edge. Savers did not lose a penny.
Since recession struck we have pursued a consistent course at local, national and international levels. Our aim has been to get Scotland and the UK through recession sooner, stronger and fairer. We are committed to getting those on middle and modest incomes through the downturn and are determined not to leave the poorest members of our society behind.
That's why we launched the wide range of Real Help measures to support Scottish families, pensioners, homeowners and businesses. The Government and the Bank of England have put more money into people's pockets and purses. Tax cuts, the VAT reduction, accelerated pensions and benefits increases, historically low interest rates and quantitative easing have boosted the money supply and domestic demand.
As Scotland's man in the Cabinet and on the National Economic Council, I can assure you that the UK Government is determined to help business. Small firms play a key role in Scotland's diverse economy making up the vast majority of enterprises and providing over half of all employment.
And Government support has helped secure 50,000 Scottish jobs in 2009.
The rescheduling of tax payments by HM Revenue and Customs was praised by the Federation of Small Businesses for 'providing much-needed breathing space'. Over 10,000 Scottish firms have rescheduled payments exceeding £188 million. This includes 630 Highland businesses rescheduling tax payments of £9 million.
At the same time, we are determined to get credit to viable businesses - through the first legally binding agreements in the world with Lloyds and RBS to increase the availability of credit. These agreements are worth up to an additional £27 billion in business loans.
We are also backing businesses who cannot get ordinary bank loans, via the Enterprise Finance Guarantee (EFG). 239 Scottish businesses have been offered loans totalling £31 million.
Meanwhile, the Vehicle Scrappage Scheme is helping Scotland's motor dealers, traders and consumers. It has boosted car orders in Scotland by nearly 12,000 cars. On the back of scheme's success, Arnold Clark last month announced 700 new jobs, over half in Scotland.
As recession has hit, so global unemployment has risen sharply, although the UK unemployment rate is the second lowest in the G7 behind Japan.
But this Government does not believe that unemployment is a price worth paying and we are not repeating the mistakes of the 1980s when a generation was abandoned to benefits.
That's why since October the Government has committed £500 million in Scotland to welfare to work and other jobs schemes.
And as we fight the scourge of rising unemployment among our 18-24 year olds I was pleased to see that 77 new jobs will be created in Highland region following the first round of successful Future Jobs Fund bids. These are worthwhile jobs which will develop the skills of our young people. More will follow in the region. I also hope that the posts will continue when the six months funding ends.
Across Scotland around 3,000 jobs have already been created by the Future Jobs Fund. This alone represents a down payment of £20 million in Scotland's future during tough times.
While it is vital that we mitigate the effects of recession we must also prepare for the upturn. Building Britain's Future is about planning and investing in recovery. It is a greenprint for growth. It is about new skills, new jobs, the infrastructure and the industries needed to succeed in the high-tech, low carbon economy of tomorrow.
I believe that our digital infrastructure is the runway for 21st century business. Two-thirds of it has been financed commercially but the remainder will come from Government. Our commitment to this was underlined in Lord Turner's Digital Britain report.
For we have entered a new era of industrial activism involving Government creatively and pragmatically supplementing the market. We are building on past successes and are committed to creating the right environment to enable our firms to seize the future growth possibilities.
Government can do this by supporting innovation, skills training, technology demonstrations and export promotion. Government must not be an obstacle to enterprise. It must be an enterprise enabler.
Through training and research grant for universities, further education colleges and research bodies the Government is tooling up the entrepreneur to take on the world. The market cannot do this alone. That's why despite the downturn we have pledged to protect basic investment in our science base.
Government possesses the unique resources to help create and nurture an enterprise economy. We need markets where possible, government only where necessary.
Access to risk capital, such as the £75 million Capital for Enterprise Fund, is one of the key commitments contained in the Government's industrial strategy New Industry New Jobs. We want to assist viable small and medium-sized companies with growth potential who are otherwise unable to secure investment.
Across Scotland I have seen the high-tech, low carbon businesses which will lead our economic recovery - and which will bring the growth and high value jobs of the future.
Our businesses are changing lives worldwide. A fortnight ago I visited Touch Bionics in Livingston. There I saw cutting-edge research, development and manufacture of devices which are transforming the lives of amputees.
Today I visited LifeScan Scotland which has grown to a business employing 1,200 people in 15 years. Through LifeScan's development and production of monitoring products they are greatly enhancing the lives of people with diabetes.
This is modern manufacturing in our midst. Across Scotland there is vision and vitality in abundance - hi-tech and green.
Scotland's got talent but we must access the markets of the future. Our creative, leading-edge businesses must access the high value markets of the populated emerging economies like China, which I visited with an SCDI delegation in March. Scottish businesses must endeavour to meet Chinese demand.
The potential is huge. Despite the global downturn, the world's middle class will treble between 2000 and 2030 to 1.15 billion. China and India will make up for two-thirds of the expansion.
By the middle of the century the Chinese and Indian economies are projected to be larger than that of the United States.
The statistics are startling. Glasgow, once the second city of the British Empire would only be the 136th largest city in China. Inverness may reach a population of 100,000 by 2030 but over 1,000 Chinese cities will reach this figure by 2015.
Knowledge creation and exploitation will be the engines to propel the Scottish economy forward in areas central to securing our future prosperity.
The £750 million Strategic Investment Fund, one third of it earmarked for the low carbon economy, will help Britain to win as a green, knowledge economy.
And Scotland has the advantages of experience and location to be at the front of the renewables revolution. The oil and gas industry has triumphed in the harsh environment of the North Sea and will continue to do so for years to come. In addition, it has given us people with highly valuable transferable skills.
The green economy will expand rapidly. Already it accounts for 73,000 Scottish jobs and £8.5 billion worth of sales. And half of the UK's renewable energy production is sourced in Scotland.
Scotland can reap the benefits of a third energy revolution. Our geology served us well in the past - with coal a mile into the earth's surface and North Sea Oil up to five miles into the earth's crust. Our geography is now coming up trumps. In Orkney I saw wave power which is powered by the energy of the Atlantic winds, some 2,000 miles from our Scottish shores. Scotland has one-quarter of Europe's entire potential tide power on its 'shorestep'. That's why our investment in the wave and tidal sector is a down payment on future growth.
I also believe that financial services will once again generate wealth for Scotland. The financial services sector consists of far more than simply retail and investment banking.
We are determined that Scotland remains a leader in the stronger, reformed financial services industry of the future. We are committed to restoring trust and confidence in the sector - to ensure that robust safeguards are in place to warn of any new financial crisis.
It was welcome to hear the Institute of Chartered Accountants in Scotland say only last week that the banking sector had displayed 'a remarkable upturn given the turmoil of the last two years'.
Scotland's financial services skills attracted Tesco Finance and Virgin to Edinburgh. Likewise, the experience and expertise of our workforce was a factor in bringing Esure and Tesco Finance to Glasgow and an additional 1,300 jobs to the city.
A revived financial services sector has a crucial part to play in our future prosperity.
Other sectors will also play key roles. Such as premium food and drink which now constitutes Scotland's largest source of overseas export earnings. In the tourism sector optimism never entirely vanished even in the depth of the downturn. Some areas, such as camping and caravanning have enjoyed a bumper summer.
Economics is changing politics in Scotland. We Scots are canny and realistic. We know a good deal when we see it. Most of us believe that we are stronger and better in the UK. It gives us the extra security arising from being part of a larger economic union. That's why I believe that the economic case for breaking up Britain has never been weaker.
At the same time the case for devolution has never been stronger. The banking crisis has tested Britain but would have broken a separate Scotland. The rescue of the two banks cost £50 billion - £10,000 for every Scot. Add to this the £585 billion to insure their toxic assets - which equates to six times the annual value of the Scottish economy.
We are committed to maintaining Scotland's strength in the UK. Britain makes Scotland stronger. Scotland makes Britain broader. We are taking forward the recommendations of the Calman Commission on Scottish Devolution. I am determined to maintain consensus and momentum behind the plans during the coming months.
The UK is a family of nations - bound by our history together and our common values. I strongly believe that we have a shared future together.
However, rescuing the banks and giving the economy a shot in the arm was extremely expensive. They were the right things to do and our actions were followed by governments across the globe. Debt and borrowing is set to rise in all the other G7 countries. But we need to return to sustainable public finances.
Scottish families and businesses have reduced their costs. They expect the same from government. The Scottish and UK Government budgets will rise next year but efficiencies have to be found. The UK Government is pledged to save £5 billion without cutting frontline services. Scotland should also pay its share - £367 million. Politicians who argue otherwise are putting their party's agenda above our country's interest.
Government can help lay the foundations for a successful and sustainable recovery. But your entrepreneurial vision and drive will be crucial and I look forward to working with you.
As I travel across Scotland I see amazing potential. The dynamism and diversity of our re-energised cities - attracting substantial investment to Scotland. Scotland's islands - leading the world in the project testing of green energy technologies. The pride in the Scottish Borders at the development of a re-focused textile industry and niche marketing of the cashmere industry.
And here in the Highlands the good news that the world-leading Massachusetts Institute of Technology (MIT) is launching a three year programme which will link it to hundreds of local businesses. This exemplifies the benefits of Scotland facing outward. The world is a smaller place that Scots want to reach out and embrace.
When this recession is over a canny sense of Scottish optimism can help us on the road to recovery. I want to see a stronger Scotland in a better Britain.
I have been impressed by the deep-seated confidence relayed to me across Scotland that we will get out of this recession and expand our economy again.
21st century Scots are proud and patriotic, with multiple identities, set against the backdrop of an open and confident culture. And being passionate about Scotland does not make you anti-British. For most Scots want to remain in a strong United Kingdom and view popular British institutions like the armed forces, NHS and welfare state with pride and affection.
The progressive, activist approach the Government is taking shows our commitment to help Scotland fully share in the benefits of a world economy gradually returning to growth.
The pace of economic decline has slowed considerably and the situation is now stabilising. Now our task is to be ready for the upturn and ready to take advantage of the new industries and new jobs which will be created. Government, business and workers went in to recession together. We will come out of it together and stronger.