Newspaper article The Evening Standard (London, England)

Bosses Become More Cautious on Quick Euro Entry; LONDON BUSINESS MONITER

Newspaper article The Evening Standard (London, England)

Bosses Become More Cautious on Quick Euro Entry; LONDON BUSINESS MONITER

Article excerpt

Byline: PETER KELLNER

SUPPORT for early entry to Europe's single currency has fallen sharply among London's business leaders. Six months ago, 40 per cent said the best thing for their company would be for Britain to join the euro "as soon as possible". That figure has slumped to 27 per cent, while the proportion wanting us to join "within the next few years" has jumped from 36 per cent to 48 per cent.

These figures emerge from the first Business Monitor conducted since Labour returned to power at last month's General Election. It also finds the capital's economy continues to prosper and business optimism remains about the months ahead, despite fears of a downturn elsewhere in Britain and in other countries.

With the Bank of England due to make its monthly decision about interest rates tomorrow, our survey of 313 executives from firms employing 250,000 people in London finds only one business in four expects to raise prices in the months ahead. In particular, fewer companies than at any time in the past two years fear they will have to pass on rising pay costs.

On the euro, our figures largely vindicate the stands taken by both Gordon Brown and his predecessor, Kenneth Clarke. With the sharp reduction in the number favouring early entry, London's business community seems to share the Chancellor's caution. Overall there has been very little change in the large majority backing entry at some point - 76 per cent in January, 75 per cent now.

Just 24 per cent think we should not join "for the foreseeable future".

However, for most executives the issue is one of timing rather than principle. Of the Conservative leadership contenders, only Mr Clarke seems to be on the same wavelength as the capital's capitalists - the very people the Tories have traditionally regarded as their own.

Pro-Europeans will also be pleased most London executives think firms should play a leading role in any referendum campaign on the euro. Our survey, for the Evening Standard and the London Chamber of Commerce and Industry, finds 72 per cent think the business community should be actively involved in a "yes" campaign, while just 10 per cent think it should speak out for the "no" camp. Only 18 per cent have no view either way.

Majorities in favour of a business campaign for the euro are strong in every sector, and among companies large and small. Our figures contradict suggestions that euro membership is a special passion of large companies and City financial firms. Manufacturers and small companies are just as keen.

One surprise is that only a minority of executives believe the value of sterling needs to come down before Britain joins the euro. One in four say the best thing for their company would be for Britain to join the euro at or near the present exchange rate. …

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