Inflation target 'too narrow'

TGWU general secretary Bill Morris: Gordon Brown's ally

Labour's biggest trade union affiliate has called for the Bank of England's 2.5% inflation target to be changed to help the UK's ailing manufacturing sector.

The case for EMU entry is one to be decided when the economic conditions are right

TGWU

The Transport & General Workers Union (TGWU) said it believed the target should be widened to a band of 2% to 3% to allow flexibility and help manufacturing firms which are being hit by the strength of the pound.

The union said the current 2.5% target did create a platform for long-term growth rather than boom and bust, but that it would support any move to stretch it to within 2% to 3%.

Last week, the head of the TUC, John Monks, also said he would like the Bank of England to take account of the needs of industry when it set interest rates.

Mr Monks said that manufacturing was still crucial to Britain's export performance, and called on the government to do more to try to boost the value of the euro.

"Many industries have modernised and their workforces have delivered higher productivity, but they can't live with a currency that is overvalued by 30% against the euro," he told workers at Belfast's Harland & Woolf shipyard.

The pound-euro exchange rate has been blamed for a number of high-profile job losses at multi-national firms such as Ford and Rover's former owner BMW.

Early entry opposed

However, in its response to a TUC strategy paper on the economy, the TGWU made it clear that it remained opposed to early adoption of the euro.

Unlike other unions, the TGWU believes there is no groundswell of support for early moves to join the single currency.

The TGWU said this policy had not changed despite growing calls from other unions and pressure groups for the UK to embrace the single currency in a bid to boost industry.

It said: "The case for EMU entry is one to be decided when the economic conditions are right.

"The T&G cannot support a commitment to EMU entry regardless of the economic conditions and the level of convergence between the UK and euroland economies."