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Thursday, 10 August, 2000, 14:40 GMT 15:40 UK
Toyota sparks new euro row
euro coins
The row over joining the euro erupts again
A fresh political row over whether the UK should join Europe's single currency has erupted after car giant Toyota told its UK suppliers to put its invoices in euros.

Conservatives blamed the government's "prepare-and-dither" approach for the wrangle, while the pro-euro camp warned that more manufacturers were likely to follow Toyota's lead if the UK ruled out joining.

The government should apologise to Toyota and all the other businesses it has been pressurising to make the running on the euro

John Redwood MP
Toyota Japan said it had made its decision because the firm wanted to minimise its "currency risk exposure".

The government says once it judges the economic conditions to be right it will hold a referendum on joining the euro - and will recommend entry.

'Extra cost and extra risk'

Conservative campaigns chief John Redwood said: "It just shows what a mess the government is making with its 'prepare-and-dither' approach.

It shows the risk to Britain's prosperity if we shut the door on the single currency

Britain in Europe
"Toyota will shed pounds to pay its UK employees, will still collect pounds from UK car buyers, and will still need yen for its transactions with Japanese suppliers and Japanese shareholders.

"All the time the pound remains as our only legal tender in the UK the euro is an extra cost and an extra risk for a UK-based business."

He went on: "The government should apologise to Toyota and all the other businesses it has been pressurising to make the running on the euro.

"Only the government can lead this big issue. The right thing to do is to keep the pound and spare us the costs of transition."

'Everyone would suffer'

Nick Herbert of anti-euro group Business for Sterling said: "A few companies with very tight margins may try to force exchange-rate risk on to their suppliers.

"This should not obscure the real issue, which is that some companies would benefit from a fixed exchange rate with the euro, but every company would suffer if we get the wrong interest rate, higher taxes and more red tape."

Liberal Democrat trade spokesman Dr Vince Cable said: "Toyota is one of the Japanese companies that has consistently been forthright about their hesitance to stay in the UK in the long term.

"We must have clarity of government policy and press ahead with a referendum on entry to the single currency to ensure that manufacturing businesses continue to provide British workers with long-term employment."

'Sterling volatility'

But Britain in Europe's chief economist Kitty Ussher said: "Today's announcement is a clear indication of the damage that the high pound is causing British manufacturing.

"It shows the risk to Britain's prosperity if we shut the door on the single currency.

"As a result of today's decision, Toyota's suppliers will feel the burden of the high pound.

"We can expect more major manufacturers to share the cost of sterling's volatility outside the euro, rather than bearing the brunt themselves."

Nick Clegg, Liberal Democrat MEP for the East Midlands, warned that a multitude of small companies dependent on car manufacturing would be put out of business because they would have to shoulder the costs of being outside the euro.

"It is yet another example of the ever-growing sacrifices which are being inflicted on British manufacturing. Standing aside from the euro is not a cost-free option," he said.

Anthony Ullmann, the managing director of Autofil Worldwide, a car parts supplier in Nottingham, said they had been under pressure for some time to put invoices in euros and said the practice was becoming increasingly commonplace between British companies.

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See also:

05 Jul 00 | Business
UK leads foreign investment
04 Aug 00 | Business
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31 Jul 00 | Business
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