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BBC Breakfast with Frost interview:
Alan Wood, Chief Executive Siemens Group & Sir Rocco Forte, Rocco Forte Hotels
18 May 2003
Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used
DAVID FROST: And now to the question which has dominated the news this past week, is Britain ready to join the euro in the near future? It's 18 months since euro notes and coins replaced the franc, the mark and the other currencies of the 12 eurozone countries. But for much longer, how much longer will Britain have to change their money when we go abroad. There it is, counting it slowly and it takes a long time, but avoiding fluctuating exchange rates is said to be one of the advantages of the single currency, to business as well as to tourists. But this business community is as divided on the subject of the euro as are the politicians. I'm joined now with, as it were, the curtain-raiser for talking to Gordon Brown in a moment, by two leading businessmen. The hotelier, Sir Rocco Forte - Rocco, good morning - and he thinks, incidentally, that Britain should stay out of the euro - and Alan Wood of the Siemens Group, who is impatient for us to go in. Let's start with you, why are you impatient?
ALAN WOOD: For manufacturing industry in particular, times have been pretty tough over the last two or three years. One of the big issues we have to face is risk associated with the fluctuation of exchange rates. The bulk of the exports from the UK go to the rest of Europe - I think it's of the order of 60 % - and if we could exclude that risk from part of our business that would be very valuable. When we're competing with other European companies they simply don't have that risk, that gives them a competitive advantage against us.
DAVID FROST: And do you think we should go in forthwith?
ALAN WOOD: Yes I think in my view the economy here has already converged dramatically over recent years with the rest of Europe. The exchange rate between the pound and the euro has shifted over recent months to a rate now where I think most people would agree it's practical for us to consider going in.
DAVID FROST: Rocco, you don't agree.
ROCCO FORTE: No I don't agree and obviously manufacturers look at it from one point of view, but the manufacturing industry only represents 18 per cent of the GDP in this country and only 16 per cent in terms of employment, so it's a very, very small part of our economy and we shouldn't rule our decisions relative to the manufacturing industry. The two main reasons why I'm against it, one is because we lose control of monetary policy, and we have the example of Germany in front of us at this very moment, which is a pretty horrifying story with almost 40 per cent of top German companies considering leaving Germany because of the situation they find themselves in today. And also the other important fact is, is that the continental countries run their economies in a different way to what we do and particularly in terms of labour market regulation, and we don't want to have the same process, a system of labour market regulation in this country as they have in continental Europe.
DAVID FROST: Of course Germany would be able, if it wasn't in the eurozone, would be able to deal with its current crisis more easily, if they weren't in the eurozone - isn't that so Alan?
ALAN WOOD: Well I'm not sure. Perhaps first of all I could pick up on the point Sir Rocco made about the importance, or otherwise, of manufacturing to the UK economy. It may well be that manufacturing is less than 20 per cent of the economy, but as far as earning foreign currencies is concerned, it's extremely important because internationally trading manufacturing companies are the strength of our export economy. If that goes down the tubes then that's going to be really bad for the economy overall.
DAVID FROST: And do you, do you feel that the figures on inward investment support your case?
ALAN WOOD: I think you have to remember that most companies that are active here still believe that we will go into the euro, sooner or later. I think that what could happen if the decision was made definitely not to go into the euro, that you'd find an awful lot more companies thinking about relocating their next major investment in some other part of Europe.
DAVID FROST: And what, what are you in this situation, Rocco? Are you a never man or a not yet man?
ROCCO FORTE: I'm a never man, unless or until Europe changes the way it runs its affairs. And it's not likely to change them in the near future. In terms of inward investment, what countries investing in this country want is, is stability, and they want a well-managed economy, low taxation and low labour regulation. That is why they're investing in this country - we have the highest level of investment, proportional investment, into Europe and into the eurozone, into the EU, over the last ten years than any country in Europe, and it's for that reason - not because we're going into the euro or not going into the euro.
DAVID FROST: But the figures are dropping, according to, you know, quite dramatically in the last two or three years.
ROCCO FORTE: The figures - it depends which figures you look at.
DAVID FROST: There I agree, there are a number -
ROCCO FORTE: The reality is, of course, that a large percentage of investment in this country comes from the United States. Thirty-six per cent of all investment into the EU comes from the United States. Because of the depressed American economy, in the last year we've had a reduction in American business but the same has happened in Ireland, which is in the eurozone, because that's very tied to American investment as well.
DAVID FROST: And what would you say is the urgent timetable? How soon would you like to see us - Rocco's a never man, you're?
ALAN WOOD: I'd like to see it happen as soon as possible because the uncertainty is unnerving for, particularly for international manufacturing companies. The trends that we've seen in inward investment, I think will continue, and I believe we could stem that if we would make a clear positive decision about it.
DAVID FROST: Thank you both very much indeed, much, much appreciated.
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