Nissan has threatened to build the next model of the Almera abroad rather than at its Sunderland plant unless the UK votes in favour of joining the euro in a referendum by 2004.
Chief executive Carlos Ghosn suggested this week that his company’s difficulties with the strong pound would mean the new model is moved overseas if the UK does not commit itself to joining the single currency soon.
Ghosn said he hoped there would be no need for ‘excruciating analysis’ when the Almera decision came because a positive euro vote would have already taken place.’In my opinion, if [the referendum] is to happen, it will be in the next three years. From all the statements we are hearing and from objective analysis of the situation, although we don’t have any assurances, we think it is very likely,’ he said.
Due to the strong pound Nissan already buys 70% of the parts for its new Micra model from overseas suppliers. With the introduction of notes and coins these competitive pressures are set to increase for industry as a whole, according to Warwick Manufacturing Group principal fellow Nick Matthews.
‘In today’s world for manufacturers to be successful they need a substantial home market. The euro has given many European companies a US-sized domestic market. But UK industry is now under the cosh because our market is too small to generate a good enough return on investment. On the issue of UK euro entry British companies stand to gain everything or lose everything if we stay out,’ he said.
Firms in Northern Ireland expect to be most affected by the new competitive pressure as they share the UK’s only land border with a eurozone country, the Republic of Ireland.
A recent survey of 400 firms by the University of Ulster found that 76% of the region’s businesses believed the euro would have a direct impact on them. The issue is seen as so important that the Northern Ireland Assembly voted this week on a motion calling for the euro to be legal tender – but it was defeated.
Meanwhile, opinion polls continue to show clear anti-euro majorities. Barclays Capital’s Eurotrack poll, released last week, found that 60% of voters would vote no, and 44% of ‘no’ voters claimed nothing would persuade them to vote yes.
Results like these will do little to encourage the government to hold an early referendum. Speculation is mounting that Tony Blair will wait until after the next general election before signalling a vote.
Former Labour party leader and European Commission vice- president Neil Kinnock said last week the government would hold a three to four-year campaign before a referendum.
However, the introduction of notes and coins next month could help to swing public opinion in favour of the single currency.
UK travellers to the eurozone will have a number of practical issues to deal with. From 1 January some bureaux de change in the UK will provide euro notes and coins. Cash machines in the eurozone will also dispense notes.
Anyone with old national notes and coins will be able to convert them to euros at currency exchanges and national central banks in the eurozone, free of charge, up to the end of February 2002. Eurozone banks and shops will withdraw the old notes and coins as they receive them. It will be important for shoppers to know the exchange rate because retailers will hand back their change in euros.