http://www.independent.co.uk/news/Business/Inside_Business/2000-07/VODeuro03 0700.shtml
3 July 2000
Prime Minister Tony Blair has been warned in a leaked memo by a senior government official, that the manufacturing sector faced meltdown unless he declared that euro membership was inevitable.
French Foreign Minister Hubert Vedrine put further pressure on Blair over Europe by signalling that France would use its new European Union presidency to press for a strengthening of the role of euro member states in the bloc.
The leaked memo and Vedrine's comments effectively threw down the gauntlet once more against Blair over Europe, just days after he tried to to play down reports of ministerial rifts over the euro and differences with Germany and France over the EU's future direction.
Fraser, head of the Invest in Britain Bureau, warned that the current strength of the pound against the euro would lead to a "significant level of high–profile" plant closures.
Ministers must "challenge the euro sceptics head–on politically, and express the view that entry into the euro is indispensable if we are to secure the future of Britain's manufacturing base." Fraser said in the memo dated May 7.
Manufacturers and euro enthusiasts jumped at the chance to pile more pressure on Blair.
Alan Wood, head of Siemens in Britain which employs about 15,000 workers, said manufacturers could cope with steady changes in exchange rates but sterling's recent swings against the euro made long–term planning a nightmare.
"Nobody knows where they are and on that basis you can't plan a business." he told BBC radio. "Commitment to join the euro would be very positive".
"This document, while somewhat hysterical in tone, is timely and the government has to take it into account." said Martin O'Neill, a Labour member of parliament who heads parliament's trade and industry committee.
Fraser said in the memo sent to Trade and Industry Secretary Stephen Byers – widely regarded as one of the Labour government's leading pro–euro ministers – that there was a "growing loss of confidence" among investors.
"There is a growing sense that the government is backsliding" over the euro, he said. If the government refused to change policy, it risked "the possible meltdown of the UK's manufacturing base".
The car industry had been vocal about sterling's strength, but makers of electronics goods were also feeling the squeeze and Japanese investors were a particular concern, Fraser said.
Aiwa was planning "major cutbacks" and he was "very worried" that Toshiba and Hitachi would transfer production to other countries.
Fraser's office declined to comment on the leak but DTI officials rushed to dampen its impact, insisting the versions carried by papers "sound highly exaggerated". They also pointed to "stunning figures" due to be announced this week which they said confirmed Britain as "the best place to do business."
Blair favours joining the euro after the next general election, due by May 2002, subject to the right economic conditions and approval by British voters in a referendum.
He has never given a specific timetable, mindful of opinion polls that show most Britons would currently vote by a 71 to 29 per cent margin against joining the single currency.