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Sunday, October 31, 1999 Published at 15:27 GMT

Business: The Economy

Business backs euro, says CBI

Adair Turner: CBI is happy with government's stance on the euro

Ten months after the launch of the euro, British businesses are, in principle, in favour of joining the single European currency, according to the director general of the Confederation of British Industry (CBI), Adair Turner.

Speaking ahead of the CBI's annual conference in Birmingham, Mr Turner told the BBC that the majority of businesses represented by his organisation believed it would be in their interests to join the fledgling currency.

The issue is expected to be hotly debated again at this year's conference. In a debate on Tuesday morning on the euro, entitled Growth Stimulant or Cold Shower?, Lord Marshal and Rodney Leach will put the case for and against joining the currency.

Mr Turner said the CBI was happy, on the whole, with the government's stance of being in favour if the move was in the best interests for Britain. Some CBI members would prefer a straight commitment to joining, he said.

CBI director general Adair Turner on BBC's Breakfast with Frost
However, he described the Chancellor, Gordon Brown's five economic tests for joining the euro as an "odd mix".

He said some of the tests were not vital, but the important test was economic convergence with other European Union countries where labour markets needed to be more flexible and public finances strengthened.

Mr Turner said CBI members would not be happy ruling out joining the currency for the next six or seven years as the Conservatives had done and he urged the party to keep its options open.

Prudent finances

Turning to the British economy, Mr Turner repeated the CBI's recent warning to the chancellor, Gordon Brown, not to go on a pre-election spending spree in his next Budget.

Public finances at the end of the fiscal year in March are expected to be in a healthier state than even Mr Brown had predicted, thanks to improving economic conditions.

There are fears that the chancellor may be tempted to spend some of his "war chest", especially with an election on the horizon.

The CBI believes Mr Brown should save any surplus rather than spending it as this would stimulate the economy and result in the Bank of England having to increase interest rates.

Mr Turner said this would worsen the problem of the two-speed economy where service industries are growing rapidly but manufacturing is still struggling to get out of recession.

BBC News Online will be providing comprehensive coverage of the CBI conference, with all proceedings broadcast live in audio. A number of the key speeches will also be broadcast live in video on the site. Click 'CBI conference live' in the related stories on the right of your screen for more details.

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