DAVID Cameron has issued a warning to Brussels not to stand in the way of Britain exploiting its reserves of shale gas through the controversial practice of fracking.
Addressing the World Economic Forum in Davos, the Prime Minister said the prospect of developing “cheap and predictable” energy sources could help to attract back to the Europe jobs which had been “off-shored” to the rising economic powers of Asia.
But he warned that the opportunities presented by shale gas - which had helped transform the US economy - could be undermined if the European Union sought to impose unnecessary new regulations.
“To relocate in Europe, businesses will be encouraged by cheap and predictable sources of energy,” he said.
“We should be clear that if the European Union or its member states impose burdensome, unjustified or premature regulatory burdens on shale gas exploration in Europe investors will quickly head elsewhere.
“Oil and gas will still be plentifully produced, but Europe will be dry.”
Mr Cameron acknowledged that there were genuine concerns about fracking, but said that if it was done properly, it could have significant benefits both for the economy and the environment.
“We need the right regulations - such as ensuring that well casings are set at the right depths with tight seals. And governments need to reassure people that nothing would go ahead if there were environmental dangers.
“But if this is done properly, shale gas can actually have lower emissions than imported gas.”
The Prime Minister was scathing about the tendency of Brussels to produce “incredibly complex and overwritten directives” which deter business from creating new jobs.
“There are still people who think that the key to success is ever greater social protections and more regulations,” he said.
“Some in the European Commission seem to think that if they’re not producing new regulations, they’re somehow not doing their job and that removing existing regulations is somehow an act of self-harm, while some in the European Parliament are tempted to gold-plate every piece of legislation.
“Let’s be clear. We don’t protect workers by piling on the regulations and directives to such an extent that they become unemployable. We have to maintain the flexibility for companies to grow and expand.”
Mr Cameron rejected the idea that the West was locked in a cycle of “inevitable decline”, arguing that there was now an opportunity to “re-shore” jobs which had been “off-shored” to the East.
“For years the West has been written off. People say that we are facing some sort of inevitable decline. They say we can’t make anything any more,” he said.
“Whether it’s the shift from manufacturing to services, or the transfer from manual jobs to machines, the end point is the same dystopian vision; the East wins while the West loses; and the workers lose while the machines win. I don’t believe it has to be this way.
“Of course, we cannot be starry-eyed about globalisation - it presents huge challenges as our economies and societies try to adapt. But neither should we take this pessimistic view,” he said.
“If we engage in the right way, if we get the fundamentals of our economies right, sort out our debts, maximise our competitiveness and build on our strengths, then globalisation offers our businesses the chance to win new contracts to export into markets that were previously closed and create jobs fulfilling the demands of new consumers thousands of miles away.
“Indeed if we make the right decisions, we may also see more of what has been a small but discernible trend where some jobs that were once off-shored are coming back from East to West.”
Earlier Chancellor George Osborne dismissed suggestions the Bank of England’s policy of “forward guidance” - intended to offer businesses and consumers some certainty about future interest rates - had failed.
Bank Governor Mark Carney was yesterday forced to declare there was “no immediate need” for a rate rise after the unemployment rate tumbled to 7.1% - close to the 7% threshold at which the Bank has said it would consider an increase in the cost of borrowing.
Mr Osborne, also speaking in Davos, insisted that the faster-than-expected fall in the level of joblessness was a sign that economic policy was working.
“Thanks to the success of policy - both Bank of England policy and Government policy - unemployment is falling very quickly so people are talking about what comes next. That’s a challenge of a success rather than a problem or a failure,” he said.
“I completely reject that forward guidance is a failure. I think what the Bank of England has done is provided clear communication, supported monetary policy that has assisted, alongside the Government’s efforts, a very strong new set of data in the United Kingdom.
“They are the equivalent in the US of five or six hundred thousand jobs a month. We have had a rapid fall in unemployment, I can’t see that’s a failure of economic policy-making in the UK. I think it’s sustainable precisely because we have both the credible monetary framework but it sits alongside a credible fiscal framework which comes down to the difficult decisions the Government has taken.”
Mr Cameron said the EU needed a big dose of “practical, good, Conservative common sense” as he came under fire for being “inconsistent” and “undermining” its work.
As he took questions after the speech, he was taken to task by someone identifying herself as a Swedish MEP.
She claimed his moves to restrict migrants’ benefits and curb free movement between EU states were at odds with his stated support for the globalised economy.
And she urged him to “ask your colleagues in the European Parliament to be more constructive because you achieve better regulations, smarter regulations, deregulation by working in the European Parliament, not just by undermining what everybody else is doing”.
Mr Cameron insisted the UK’s warnings about over-regulating shale gas were an example of the “very constructive role” its politicians played in the European Parliament.
It was a “permanent battle” to hold back new single market regulations, he added.
“But I am confident that we are making some progress. The European Commission for the first time is not just looking at regulations it might bring in; it is now looking at regulations it might scrap. It is going to have a scorecard for how it is getting on.
“That is a British initiative.”
He said he would “make no apology” for tightening benefit rules and seeking longer and more stringent transitional periods before residents of new EU member states gained the right to live and work in other EU states - such as having a comparable national wealth.
“It is completely consistent to be in favour of widening membership, to be in favour of the process of membership driving development, but at the same time understanding the very real concerns which people have about migration and which we need to address,” he said.
“I would argue that is practical, good, Conservative common sense and frankly that is something the European Union needs a lot of.”
“One of Britain’s roles in Europe is to speak very frankly and speak very clearly.
“To speak very clearly about those things that we welcome, that are working well for Europe and to speak frankly when things aren’t working.”
“That’s a role I’m proud to play.”
Mr Cameron issued a warning on higher wages - saying that boosting pay before the the economy could afford it risked losing jobs rather than creating them.
He was responding to TUC general secretary Frances O’Grady who urged him to “show a lead” by backing its call for workers to be paid the Living Wage - which is set significantly higher than the existing statutory minimum.
“I want to see people paid more but the truth is we have to make sure we are succeeding in terms of productivity, in terms of our output, in order that that pay can be earned,” he said.
“If you decree it across the country without considering whether it could be afforded, you lose jobs rather than gain jobs.
“So I support it but people should pay it when they can afford to and increasingly you are seeing a number of councils and other organisations able to do it and I welcome that when it happens.”
Mr Cameron welcomed one questioner’s assertion that Britain was home to “the best brains in the world”.
But he added: “I work with a lot of people who are a lot brighter than I am.”
Asked about Mr Carney’s indication that interest rates may not rise if unemployment falls below the 7% figure, Mr Cameron told Bloomberg TV: “To be fair to the governor, he always said that this was a threshold, not a trigger.
“What he said yesterday was consistent with that.”