Blog: Dave LeggettUK in the euro debate

Dave Leggett | 13 May 2003

The great should-the-UK-join-the-euro debate sparked into life this week. It doesn't seem to have got very much further though. The UK government seems to have an uncertain position, wanting to join up in principle (though the chancellor seems to have more than his fair share of doubts) but mindful of the fact that a referendum now could well result in a 'no' vote. The business position seems to be split also. The no camp is latching on to the problems facing the German economy and the one size fits all interest rate. The yes camp can at least take comfort from the fact that the sterling-euro exchange rate is becoming more favourable for entry. For what it's worth I think the only 'test' the government is serious about is the probability that a referendum will deliver a yes vote, so I can't see a referendum happening until after the next election. Too risky to do it before and risk a bad campaign in the run-up to a General Election.

The position of the auto industry is interesting. GM's Wagoner has been in Britain this week to announce investment for Ellesmere Port (which will be getting the next Astra) and professed that whether or not the UK is in the euro or not is not crucial to investment plans. Maybe he's finding that easier to say now that the euro has appreciated against sterling a bit. Ford is still taking a pretty strident pro-euro line though. Toyota and Nissan have been quiet on this subject lately - perhaps just thankful that exchange rate losses on shipments to the Continent are lower now. But if the exchange rate moves the other way again...


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