SPEECH TO BE GIVEN BY THE PRESIDENT OF THE REPUBLIC OF FINLAND AT A BANQUET AT GUILDHALL, 18th October 1995

On behalf of my wife and myself, I should like to express to you, My Lord Mayor, my heartfelt gratitude for your kind words,addressed to me and to my country on behalf of the City and the Corporation of London. We feel most honoured to enjoy the hospitality extended to us tonight by the City of London on the occasion of our State Visit to Britain at the gracious invitation of Her Majesty The Queen.

A famous German historian in the 19th century (reputedly Leopold von Ranke himself), is quoted as having said that the flow of history in Britain cannot be so different from history in other countries, the difference being that British history is so excitingly written. Standing here in the Guildhall today, I must admit that you also have a great gift for presenting your long and magnificent history in visual form.

I know that the Guildhall plays a key role in the life of the City of London. Over the years, it has witnessed the growth and development of the City into a dynamic world centre of finance,trade and culture. The City's reputation is naturally well known in Finland, as it is everywhere in the world. It is a place in which innumerable economic bonds are forged. The City of London, its banks, financial institutions, and famous Stock Exchange have shown their incomparable skills in providing Finnish industry with share capital, finance, business expertise and contacts in their process of internationalisation.

Throughout this century, the United Kingdom has been one of Finland's most important trading partners, where initially our basic industries, largely forest-based, and later our high-tech companies have gained export income and initial experience for their wider operations.

I believe that Finland is still known in Britain mainly for its nature, its forests and its forest-related industries. Much of what is read here is indeed printed on Finnish paper. More than many other industrialised countries we are dependent on our renewable natural resources. The forests are fundamental to our economy, our social fabric and our culture. It is therefore in our enlightened self-interest to tend them and to protect their ecology and biodiversity in the way we manage our "green gold". We constantly update the technology used to preserve our forest resources for future generations.

The metal and engineering industry is now, however, the largest manufactoring sector in our economy, and the electronics industry currently the fastest-growing.

Just over half of our exports to Britain still come from our forests, and last year saw a substantial growth in this sector.We have, however, been very pleased to see that machinery and other equipment have now increased their share to account for one quarter of our total exports to Britain. Last year our overall trade with Britain increased by two-digit figures and the prospects for further growth look good. Finnish companies also find Britain an attractive market for their direct investments. At the end of 1993, the stock of Finnish investments in Great Britain was 4.2 billion FIM, five times more than British investments in Finland.

The Finnish economy has regained its dynamism after a deep recession in 1990-1992. The currency has strengthened, and long-term interest rates have fallen. For some time inflation has been the lowest in the European Union. Total output is forecast to grow by 5 per cent this year and 4.5 next year. The other side of the coin in the rapid adjustment process of the last few years has, however, been the high level of unemployment. As we are all aware, new jobs in today's industrialised economies are created only by increasing flexibility and encouraging new enterprise, especially in the service sector. The necessity to reduce unemployment will steer our policies at home and in the European Union for years to come.

Finland too seeks to secure favourable conditions for industrial activity, domestic and foreign-owned alike. The years of deep recession have clearly demonstrated the need to strengthen our industrial base through increased investment.

For a country like Finland, EMU presents an opportunity to create lasting stability in our financial markets, and thereby to lower interest rates and to improve conditions for investment. For Finnish industry, and indeed for the whole economy, the benefits of EMU would, in the longer term, exceed the difficulties of adjustment. It is therefore our aim to be amongst the first group of countries to join the final stage of EMU. However, for the successful functioning of EMU, it is important that the participating countries should be capable of living under strict economic discipline in the longer term as well. The criteria themselves seem to be attainable for us in the course of the next two years.

The radical changes which have taken place in Europe over the last years have made many companies, doubtless also in Britain,redraft their business strategies. Today, Finland offers the opportunity to international investors to start a business or gain a foothold in the new Northern Europe in an efficient,productive and secure manner. Finland is located in the centre between strong Scandinavian purchasing power and surging demand in the Baltic States and in Russia. As the only country in the North, Finland offers a network of contacts and a ready-made infrastructure, as well as first-hand experience of the trading cultures in all of these markets.

The early months of our membership of the European Union have passed smoothly, and largely in line with our expectations.Public support for membership has been maintained since our referendum a year ago. In my view, people from the outset took a realistic view, not expecting the Union to change their everyday lives instantly and dramatically, but seeing that its benefits could mostly be expected to become clear in the longer term.

In their perception of the future of the European Union, Finland and Britain are close in many aspects. We both hope that next year's Intergovernmental Conference will create the framework necessary to master the comprehensive agenda of enlargement and internal change. Our goal in this Conference is to ensure that the achievements of the Union so far remain intact, and that integration can be further developed, even as the Union grows larger. Our point of departure for this development is a union of independent states, where the interests of both large and small Member States are safeguarded. Another important goal for us is to bring the Union closer to its citizens. In this respect, the IGC can improve the popular image of the Union by enhancing transparency, subsidiarity and gender equality as well as the internal security of the Union. It is also in our common interest to promote the efficient use of the Union's resources and funds.

The Central European and Baltic states have indicated their interest in joining the European Union, and Finland supports all efforts made to create the conditions in which this goal may be attained. An enlarged membership of the Union offers the prospect of greater political stability and sound economic development in our continent. Through Europe and Association Agreements, the Baltic states have been brought into the accession strategy of the Union. This is a major step towards their reintegration into Europe. The Baltic Sea is regaining its role as a connecting waterway in Europe.

Finland's relations with Russia have experienced considerable change over the last years. They are today more pragmatic and business-orientated. Our fundamental interests with regard to Russia, though, have not changed. We believe that the integration of Russia into a culture of international cooperation and a common security framework are the best way to increase stability and prosperity in Europe. Partnership between the European Union and Russia, based on common values and norms,will be decisive for Europe's security. We fully support the strengthening of the relations between the Union and Russia through a new strategic approach based on the Partnership and Cooperation Agreement. We particularly welcome Britain's active contribution to the discussions on Russia within the Union.

Finland and Britain also share the determination to work for a further liberalisation of world trade. On many issues we both seek a world with lower trade barriers and less regulation.

Over the last 50 years, the relationship between Europe and America has flourished. It has brought security and stability to the western world. There now seems to be an increased willingness to share these values within the wider Europe.There are many obvious attractions in an enhanced transatlantic relationship, such as new wealth and employment, but it is vital for Europe to reach out still further by intensifying its relations with the nations of Asia, the Middle East, Africa and South America. All these aspirations will open more doors and offer further opportunities for the citizens and companies of Europe.

My Lord Mayor, Ladies and Gentlemen,

Let us raise our glasses to the health of the Lord Mayor and the Corporation of London, and to the success and prosperity of economic cooperation between Finland and Britain.