How can the business community and the public decide when a senior economist at a leading German bank says Britain would benefit by joining the single currency and our ambassador in Japan sticks to the view that Japanese plants would leave Britain unless we join the European Monetary Union.
Some companies – Toyota, Nissan Corus and Ford – have cut jobs, announced plant closures or warned that future investments are at risk because of a high pound relative to the weak euro, especially manufacturers who account for the just over 50% of our exports, sold to mainland Europe. But manufacturers who rely on imported raw materials have one big gain in their favour ? strength of the pound.
UK exports are currently at their strongest levels for three and a half years, which suggests that exporters are competing in Europe despite the strong pound and selling to other world markets.
Should there be concern about the risk of losing foreign investment in UK if we don’t join the single currency? Last year a record number of new projects came to Britain; over 100 more inward investment projects than the year before ? up from 652 to a record 757, according to Invest UK. Of these 269 were entirely new projects, 255 involved expansion and 214 were mergers and acquisitions. New inward investment by thirty different companies created nearly 553,00 new jobs.
The cost of changing over to the euro has already been estimated at many billions off pounds which includes money handling machines and IT software, plus the cost of training staff to use the new currency.
For businesses, which don?t trade in the eurozone, the change to Euro means an additional conversion costs without benefits. For these that trade in the eurozone there is the advantage of removing short-term currency fluctuations.
A new survey by the European Commission based on the data form EU banks, shows that British businesses already use the Euro more than many of their rivals. British companies use the Euro for 29% of their International transactions (by volume) compared with 12.5% in Germany and a European Union average of 23%.
The survey on the use of the Euro shows the pragmatic attitude of the British businesses towards their economic partners of the eurozone, Some 7% of the British businesses already hold Euro bank accounts, compared with EU average of 3%.
The upshot is that British businesses already use the euro more than many of our rivals even though public support for the single currency at its lowest level. It could be at least a year before a referendum is held to decide whether we join. In the meantime we need to know more of the pros and cons of joining are staying out.
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