The head of Siemens UK, the British arm of the world's largest electrical engineering company, has warned that Britain could become a "speculators' paradise" if it stays out of the European single currency.

Jurgen Gehrel: worried about a nightmare scenario

Jurgen Gehrel, the company's UK chief executive, told the BBC: "Exchange rate fluctuations are not good for our business. We need stability.

"And I have to admit that I am a bit worried about a sort of nightmare scenario that the UK becomes the speculators' paradise.

"That would be very bad for our business."

Siemens has invested millions of pounds in Britain, including its major development in north Tyneside.

The company employs around 15,000 people in Britain

The company wants to double the plant's capacity by the year 2000, although it admits it will be longer before it makes a profit.

As one of the largest inward investors in the UK, Siemens employs around 15,000 people.

But Mr Gehrel said future investment could depend on the position Britain adopts on the euro.

He stressed Siemens UK does not intend to penalise British suppliers that do not quote in the European currency.

The north Tyneside plant

But he said companies that do not use the euro will be unable to compete on equal terms and will lose out in the long run.

Siemens plans to start switching over to the euro early in 1998, he said.

Bernd Euler, Siemens finance director in the UK, added: "If companies within the Emu are offered two identical deals from suppliers, one quoted in sterling and the other quoted in euros, the euro supplier has a competitive advantage because it offers an extra benefit to the customer."

"This is an important message for all UK companies. Whether the UK is in the Emu or not, if UK companies are not prepared to quote in euros, they will lose out long-term if their competitors are prepared to quote in euros."

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