Nearly half of the finance directors questioned have not been persuaded that joining the European single currency would be a positive move, indicating that introduction of the euro on the continent has not quelled the fears of UK business.
Only one in three respondents have improved their view of the euro since it went live, according to this week’s latest Accountancy Age/Reed Personnel Big Question survey of almost 300 UK FDs. In the run-up to the launch of the currency, a similar Big Question survey found that only one in three FDs were against the euro.
Institute of Directors chief economist Graeme Leach said: ‘The results reflect the continued caution of businesses across the UK to a one-size-fits-all approach to financial policy. People have seen what happens when interest rates are not set for domestic concerns on economies like Germany.
‘I think we’ll see this caution harden over time unless the Treasury comes out in favour of joining soon.’
CIMA chief executive Charles Tilley said: ‘There are clear advantages to a single European currency in terms of trade. But there are also clear disadvantages in terms of economic control in the UK and the political differences between the large number of Euroland countries, which could make management of the currency difficult.
‘The real question is whether the trade advantages would outweigh economic and political issues. That’s not easy to answer.’
But others disagree on the state of business opinion over the euro. Jessica Bawden, a spokeswoman for campaign group Britain in Europe, said: ‘UK businesses are waking up to the UK’s isolation outside the euro.
Half of our trade is with Europe but outside the euro we can no longer trade on a level playing field – missing out on a market of 380 million consumers. British businesses want the stability that could be provided by a yes vote in a referendum.’
The chances of an impending referendum on the Euro also seem to be fading. At the recent meeting of G7 finance ministers, attended by chancellor Gordon Brown, European Central Bank president Wim Duisenberg warned that global uncertainty over the Iraq crisis could force it to cut interest rates.
Such a move would take Europe further out of line with the UK’s economy.
Goldman Sachs has also said that UK entry into the euro would likely result in tax rises.
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