The government this week came under pressure from senior business figures and trade union leaders to take a clearer line on British entry to the European single currency.
Renewed pressure from pro-Europeans comes in the wake of reports from the Organisation for Economic Co-operation and Development and the UK treasury, which predicts the UK would be in a position to join the euro within two years.
Adair Turner, former director general of the Confederation of British Industry, said the argument was in danger of being taken over by anti-euro campaigners.
Speaking at a Britain in Europe campaign event, he said: `We need to raise the quality of the debate and put forward the economic arguments. We can’t go forward pretending this debate cannot occur.’
But he acknowledged that entry into the euro would require a potentially difficult vote first. `A referendum on this issue will probably be a horror story,’ Turner said.
Over the past month the pound has fallen against the euro, from the equivalent of DM3.40 to DM3.08, prompting hopes the two currencies could be converging.
A spokesman for Nissan UK said manufacturers here were still being hit by the gap between sterling and the euro. `The issue for us is a cost base that is competitive. We need an exchange rate that is not overvalued. Component makers facing investment decisions are probably not going to want to operate in the UK.’
Ken Jackson, leader of the Amalgamated Engineering and Electrical Union, said: `Whether or not we join is the single biggest issue this nation faces. We can’t avoid the issue during the next election. It’s naive to assume it won’t be the defining theme.’
Opponents of entry are also keen for the government to make its position clear. David Hearnshaw, managing director of Hampshire-based power cable fittings maker Preform Line Products, told The Engineer: `Calls for devaluation against the euro are short termist and ill advised. We should stay out for the foreseeable future to see it through two economic cycles.’
Ebac, a dehumidifier maker based in the north east of England, does £40m worth of business with the eurozone annually. But chairman John Elliott said the government should not seek to join the euro. `The euro is fundamentally flawed,’ he said.
He added: `One currency without one government can’t work. The weak euro is hurting us but the only people who can strengthen the euro are those in the eurozone.’
AN ISSUE THAT DEFINITELY WILL NOT GO AWAY
Pressure for a firmer euro policy has been increasing steadily from both inside and outside the government:
16 May Northern Ireland secretary Peter Mandelson makes a speech in favour of euro membership at a trade union conference in Belfast.
2 June Former chancellor Kenneth Clarke calls for a vigorous euro campaign in a speech at the pro-European European Movement’s annual conference.
3 June Another former chancellor, Lord Jenkins of Hillhead, warns Tony Blair against dithering on the euro.
5 June Pollster Bob Worcester of Mori says the prime minister should show leadership over the euro to win a possible referendum.
8 June Foreign secretary Robin Cook acknowledges that Greek euro membership will add pressure for the UK to join.
9 June The Organisation for Economic Cooperation and Development predicts UK economic convergence with the eurozone within two years, and industry secretary Stephen Byers makes a speech backing euro membership.
12 June Ken Jackson, leader of the Amalgamated Engineering and Electrical Union, tells its conference greater action is needed on the euro.
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