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Last Updated: Wednesday, 7 January, 2004, 10:31 GMT
Euro: Business winners and losers
By Brian Wheeler
BBC News Online business reporter

The UK Government's decision to delay a possible referendum on euro entry split the business community.

It was met with dismay by some manufacturers, who claim the vagaries of the exchange rate harms trade with the eurozone.

Euro logo at ECB
The euro debate rages on
But many retailers - spared the expense of converting to euros - no doubt breathed a sigh of relief.

But beyond that, it is difficult to pick out unequivocal winners and losers.


Depending on whom you speak to, delaying euro entry will lead to the loss of thousands of jobs - or it will save the UK economy from recession.

After displaying initial enthusiasm for the single currency, the main business organisations have largely fallen silent on the issue.

The last thing we want is an annual reassessment
Digby Jones, CBI
When the CBI consulted its members, it found them split down the middle.

So rather than lobbying for entry, the organisation has concentrated on providing what it calls impartial information on the issue.

Most businesses seemed more concerned about clarity and stability.


Recently, CBI director general Digby Jones said: "The last thing we want is an annual reassessment.

"The UK economy is flexible and stable. We need certainty to keep it that way."

However, the pro-euro group Britain in Europe claims many companies will lose out from further delay. These could include:

  • Multinational firms with factories in the UK - foreign investors employ around 1.4 million people in the UK. Many of them have said they may think twice before investing in the UK again.

  • Manufacturers - this hard pressed group still represents 20% of the British economy. They have long complained about fluctuations in the exchange rate harming their competitiveness abroad.

  • Tourism - Europeans account for two thirds of visitors to Britain. The British Tourist Authority believes they will become increasingly weary of having to change currency - and paying commission to the banks.

  • Agriculture - the NFU estimates 58,000 jobs have been lost in this sector as a result of the UK remaining outside the euro.

House prices

The anti-euro No Campaign is more reluctant to identify specific winners from keeping the pound.

It argues the UK economy as a whole will suffer if Britain joins the single currency.

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The most important factor is stability, says the No Campaign, which is being delivered by the economic framework put in place by Chancellor Gordon Brown, with an independent Bank of England.

The result of that is that Britain has lower unemployment and higher growth than its major European competitors.

Why jeopardise all of that by joining up with a less flexible and responsive European Central Bank, it argues.

Britain is particularly vulnerable to fluctuations in interest rates, as more people have variable rate mortgages.

Losing control of interest rates could, the antis argue, lead to a house price crash.

This would bring the boom in consumer spending that has been driving the UK economy to an abrupt halt, tipping the country into recession.

Greater volatility

The argument that Britain will lose trade by remaining outside the eurozone is also dismissed by the antis.

The UK - and south of England in particular - has a greater exposure to the US dollar than other parts of Europe.

About 32% of UK trade is done in dollars, compared with 20% in euros.

For these companies, joining the single currency will probably lead to greater exchange rate volatility not less, the No Campaign says.

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