FOR AND AGAINST – Steer clear of currency decision.

I believe business should be free to make their own decisions about which currency they use.

Some multinationals run their businesses in dollars, setting dollar prices and sending out dollar invoices. I have myself run an international business in dollars from a UK base. I never thought as a result that the UK should ask to swap the pound for the dollar.

If multinationals want to run their businesses in euros they are free to do so, but that does not mean I should have to switch to the euro to buy my baked beans. One of the most interesting things about the long period when we were urged to use the ecu as a common currency in Europe was how few businesses did so, and how few businesses even today with the full euro scheme close at hand have chosen to use it for their European operations.

Finance directors of multinationals should not encourage their businesses to speak out in favour of euro membership for Britain. A big majority of the British people are against the euro for a whole variety of good reasons. Why antagonise many potential customers by supporting such an unpopular cause?

The British people will decide the future of the pound in the general election, or in a subsequent referendum, so leave it to them. Remember that joining the euro does not abolish currency fluctuations – it means joining a currency which is more volatile against the dollar than the pound. Nor does it mean economic stability, it means accepting interest rates that would be wrong for Britain, putting pressure on the economy in other ways.

Many multinational business leaders urged the government to join the Exchange Rate Mechanism, which was a dry run for the singly currency.

They lived to regret their advice. The single currency is an ERM you cannot get out of.

Once adopted, you just have to live with the greater regulation and the higher taxes, which would follow, as the British economy was brought into line with the continental one. Foreign exchange transaction costs are a tiny fraction of total costs.

Getting the right interest rates are far more important to business costs, and to a successful economy. More volatility against the dollar would not be good for British business either, so let’s leave well alone.

– John Redwood MP chairs the Conservative Parliamentary Campaigns Unit


My company, Linde Hydraulics Ltd is the British arm of the German engineering company Linde AG. Since January we have been invoicing several of our British customers in euros.

This makes business sense for us and will increasingly make sense for more and more British companies as well as inward investors. As long as Britain remains outside the eurozone, industry here will be exposed to the risks of exchange rate volatility. Only two years after the introduction of the euro, we are beginning to feel the chill of being outside.

The EU is a market of 370 million people, which will rise to a market of 470 million consumers after enlargement. Companies with a substantial presence within the eurozone are reacting to economies of scale and are beginning to consolidate their accounting functions in one country. When euro notes and coins are introduced in January 2002, further savings for individuals and business will come as they find it easier to compare prices across borders and seek out better deals.

Competition will increase, spurring innovation that, over time, will lead to faster wealth creation. We need to be part of that level-playing field, not sitting on subs-bench on the side-lines. In stark comparison to us, exporters in the eurozone are finding their lives made easier because the problem of fluctuating exchange rates has been permanently eliminated in cross border transactions. When about half our trade is with the euro-zone, those who oppose the single currency in principle are ignoring the interests of British business.

For some time now manufacturers, inward investors and exporters have been speaking out on the effects that the high value of sterling and exclusion from the euro is having upon their businesses. At Linde we know only too well the competitive disadvantage our British operations are suffering as a result of being outside the eurozone.

A report by Ernst & Young showed Britain’s share of new inward investor projects into Europe in 1999 fell from 28 per cent to 24 per cent of the European total. France’s rose in the same time, from 12% to 18%. Overall, euro countries received a net increase in projects of 11 per cent and non-euro countries a reduction in investment of 18%.

For UK-based engineering companies who depend on inward investment for their livelihoods these are bleak trends indeed.

– Ian Morris, managing director of Linde Hydraulics Ltd and vice-chair of the CBI Southern Region.

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