Mayor wants London to lead eurozone

Ken Livingstone: The City's future depends on the euro

London Mayor Ken Livingstone has warned the City could be cast aside as a financial centre in Europe unless Britain joins the euro.

Speaking to an audience of the London First business group in the City, he underlined the importance of UK membership of the european single currency and said London would lead the way under his mayorship.

The City's success is nothing to do with our national currency

Nick Herbert, Business for Sterling

He said failure to join would allow the "eurozone" countries to create their own financial centre within 15 years.

Mr Livingstone warned there was no long term future for a sterling trading bloc and New York would eventually triumph if London had to compete against the dollar.

But he said the City's dominant position was secure for the immediate term.

Berlin threat

"If the UK enters the euro the City of London, given its scale of current advantage, is secure as the financial centre of Europe for at least the next half century," he said.

"Not only will it dominate the continent's finance but it will continue to attract the great US and Japanese financial institutions looking to do business in the eurozone."

London should plough ahead with a euro campaign says the mayor

He said Europe would not allow its currency to be controlled via a financial centre which was not a member of the euro.

"If London decides deliberately that it does not want to be the financial centre of the new euro-dominated Europe, then the eurozone will build its own financial and monetary centre," he said.

"The only question is whether it will be in Frankfurt or, more probably, Berlin.

"It may take 10 or 15 years, but the City of London will have decisively marginalised itself."

Campaign appeal

Calling on supporters of the euro in London to now begin campaigning to join, the mayor said he believed it was inevitable that Chancellor Gordon Brown's five economic conditions for entry would be met.

Mr Livingstone's remarks came after Treasury Minister Melanie Johnson told MPs she believed it was not certain that the UK would sign up to the euro.

Giving evidence to the Commons Treasury Select Committee earlier on Tuesday, she said: "Membership is not inevitable."

The pro-pound organisation Business for Sterling rejected Mr Livingstone's comments.

Chief executive Nick Herbert said: "The City's success is nothing to do with our national currency.

Union pressure

"It is based on competitive advantages, in particular flexibility and low taxation, which would be jeopardised by membership of the economic and monetary union."

Mr Livingstone's speech comes at a time when the government is facing increasing pressure to join the single currency.

Several major companies and business leaders have warned that their long-term investment in the UK is dependent on Britain's eventual membership of the eurozone.

Some trade unions, particularly those with a base in manufacturing, have expressed their impatience at the government's unwillingness to openly campaign for membership.