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Wednesday, 13 June, 2001, 12:21 GMT 13:21 UK
UK debate on euro heats up
Larger-than-life euro coins
Britain's debate on the euro is looming
With the general election over, the great and the good of British industry are turning their attention to the euro.

In recent days, the debate on joining the European single currency has gathered momentum, with business leaders lobbying the government for an early referendum on the issue.

The government's most important task must be to open up a great national debate on the future of Britain and our relationship with the rest of Europe

Britain in Europe campaign
On Wednesday, pro-European business leaders backing the Britain in Europe campaign wrote a letter to The Times newspaper urging the government to take action.

"The government's most important task must be to open up a great national debate on the future of Britain and our relationship with the rest of Europe," the letter said.

"For too long anti-Europeans have dominated all consideration of that question and the government must now do more to set the agenda than it did in its first term."

The battle cry

Certainly the defeat of Conservative leader William Hague seems to have momentarily silenced the euro-sceptic camp, with the pro-euro supporters temporarily seizing the spotlight.

William Hague, leader of the conservative party
Mr Hague's doomed campaign has silenced the sceptics
A letter to the Financial Times by Rodney Leach, director of Matheson & Co and leader of the anti-euro group Business for Sterling, has been overshadowed by The Times letter.

In his letter, Mr Leach wrote that speculation about replacing the pound would cause instability for the UK economy and could lead to a hike in interest rates.

It is no coincidence that the pro-European battle cry has accompanied record falls in the value of the pound.

On Tuesday, sterling dropped to a 16-year low against the dollar on the expectation that a new Labour government could hasten entry into Europe's Economic and Monetary Union.


Prime Minister Tony Blair has so far resisted the pressure to back the launch of a formal debate on the euro.

Prime Minister Tony Blair
Mr Blair has resisted pressure to launch a debate on the euro
His spokesman has said that the government would not rush the UK into voting for euro membership in a referendum on the back of the general election.

He added that the government is not recommending that Britain joins the euro at this stage.

The government's official watchword on the issue is to see how the UK fares in five economic tests imposed by Chancellor Gordon Brown.

The assessments will be published before June 2003, Labour has promised.


In the meantime, however, there has been plenty of opportunity for critics to needle the government on supposed divisions between euro-sceptics and europhiles within the cabinet.

Claims that Robin Cook, the former foreign secretary, was gagged from making the case for euro membership have been rejected by Downing Street.

Jack Straw, the new foreign secretary
Could Mr Straw put forward a reasoned argument for joining the euro?
Much has also been made of the euro scepticism harboured by Mr Cook's replacement, Jack Straw.

While some have argued that putting Mr Straw in such a key position signals backtracking by the government, others point out that only a sceptic could present a reasoned argument to adopt the euro.

Mark Leonard, director of Foreign Policy Centre, an independent think-tank set up in 1998 by Mr Cook, has suggested that Mr Straw is the man for the job.

"With his strong credentials as a scourge of Hampstead liberals, the new foreign secretary Jack Straw is well placed to argue the practical, patriotic case [for the euro]," he wrote in an opinion piece published by The Telegraph newspaper.

Speaking out

Mr Leonard is also keen to capitalise on the recent ground swell of support for the euro.

"But this sanguine mood will fade unless the government speaks with a clearer voice on Europe," he warned.

John Monks, general secretary of the Trades Union Congress, has also pressed for urgent action.

"Campaigning for early entry at a competitive exchange rate must be our collective priority and we shall be telling the government this," he told union members in a speech on Tuesday.

Mr Monks' advocacy of the euro is grounded in easing the pressures on UK manufacturing.

Technically, a single currency would boost British exports, which have been made less competitive by a strong pound.

Even London Mayor Ken Livingstone has joined the debate, saying he wants the euro debate to be held over the summer before a referendum on the issue in September.

Political gamble

Whether the impassioned call for debate will stir the government into action, depends upon Mr Blair's readiness to take a political gamble.

The doomed campaign by Mr Hague to save the pound suggests that most of the British electorate remains indifferent about the euro.

Neil Fitzgerald, chairman of Unilever
Unilever's Niall Fitzgerald accuses Mr Blair of 'ducking the issue'
This means Mr Blair would have his work cut out trying to inspire the active involvement of the British public in any debate.

Equally, possible defeat in a referendum - following the government's advocacy of the euro - would be a major setback for Mr Blair's political career and his party.

Niall Fitzgerald, chairman of Anglo-Dutch consumer giant Unilever, has accused Mr Blair of "ducking the issue", claiming that continued uncertainty could deter many companies from investing in the UK.

Veiled threats

As a signatory on the Britain in Europe letter to The Times, Mr Fitzgerald is vociferous supporter of holding an early referendum.

He has already warned that Unilever - with brands that include Lipton tea and Dove soap - would question whether Britain "was the appropriate place for the headquarters of an international company" if the referendum is delayed.

An increase of such veiled threats might eventually galvanise the government into action.

Having wooed the business vote so assiduously, the Labour party would be loathe to jeopardise the support of key figures.

Plus the government certainly would not want to contemplate the loss of any British jobs or inward investment because of a protracted spat over the euro.

Mr Blair has already shown his mettle when he embarked on a personal mission earlier this year to persuade the Japanese car firm Nissan to pick a British site for building the new-style Micra.

As Mr Fitzgerald has suggested, there may be more battles to come, culminating in a referendum showdown.

See also:

13 Jun 01 | Business
Intervention talk revives euro
12 Jun 01 | Business
George rules out early euro entry
12 Jun 01 | Business
Pound plunges against US dollar
08 Jun 01 | Business
Pound under political pressure
08 Jun 01 | Business
Q&A: The falling pound
07 Jun 01 | Business
Pound hits new 15-year low
07 Jun 01 | Business
ECB under fire over euro
19 Sep 00 | UK Politics
Euro 'a political argument' - Monks
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