The euro’s first 100 days have not been good for UK manufacturers. Interest rate cuts by the European Central Bank have combined with political scandal in Brussels to reduce the value of member currencies relative to sterling, making British exports even more expensive.
Industry associations, including the Engineering Employers’ Federation, have called for a DM/£ exchange rate of 2.60. This equates to a euro price of about £0.75. The rate at the start of this week was around £0.67, which is equivalent to a pound trading at DM2.91.
Meanwhile, business opinion remains divided on whether to join. Most Federation of Small Businesses members want to stay out, believing entry could cost £2-3,000 per firm. The Institute of Directors also believes the UK should stay out. But a recent Lloyds TSB survey of medium-sized firms showed two-thirds in favour of entry. Large international companies are generally favourable.