Mr Monks said the 11 countries involved in the launch at midnight on 1 January will attract more overseas investment than Britain and will gain a "real economic advantage".

"It is beginning to look as if we have repeated the standard British error of coming too late to Europe to secure the best deal possible," he said in his New Year address.

Mr Monks highlighted the 3% interest rate now applied across the euroland countries and contrasted it with Britain's 6.25% rate.

Sir Clive Thompson: Standing on the sidelines will achieve nothing

He spoke as the Confederation of British Industry's President Sir Clive Thompson called for Britain to be at the centre of the European debate.

"Standing on the sidelines, watching others make decisions that affect us will achieve nothing," he said.

But he said the outcome of the single currency was still uncertain.

"We are entering uncharted waters and nobody can be precisely sure of the outcome. We will soon see if one interest rate does work for 11 countries, as well as the effects of Britain's decision to stay out.

"All this should contribute to a more grown-up debate about the single currency," he said.

'Big advance' for workers

Mr Monks also hailed the government's Fairness at Work proposals, which will go before Parliament next year. The plans include forcing companies to recognise a union if a majority of their employees vote for it.

"While we have some concerns about some points there is no doubt that it represents a big advance for people at work," he said.

However, other business leaders were less positive about the government plans for employment law.

Chris Humphries, director-general of the British Chambers of Commerce, warned in his annual message to members that government regulations were threatening jobs, by burdening companies with bureaucracy.

"Ironically, the government's current agenda on employment legislation represents by far the biggest threat to employment growth in the UK next year," said Mr Humphries. He also called on the government to exclude companies with less than 50 employees from union recognition rules.