Brown spells out plans to shadow the single currency

British business will be operating a shadow currency to the euro when EMU starts in 1999. Gordon Brown, Chancellor of the Exchequer, yesterday spelt out the extent to which the euro will become the common currency of business as the debate raged over mone

Mr Brown yesterday announced a sweeping package of measures designed to prepare businesses for monetary union in 1999 including allowing them to convert shares to euros and pay taxes in the new currency.

The moves will be seen by Euro-sceptics as further evidence of how Britain will shadow the single currency to the point of de facto adoption, while remaining outside the first wave of member states.

The measures are the clearest indication yet of the Blair administration's belief in the merits of EMU and its determination to ensure British business is not disadvantaged, even though the pound will not enter until 2002 at the earliest. The DTI is to consult business on the possibility of amending the Companies Act to make it easier for British firms to issue shares in euros and convert existing shares to euros. Companies will also be able to file accounts in euros and set up bank accounts in the currency.

Adair Turner, director general of the CBI, said that adoption of the euro by business would have "a pervasive effect on public opinion". Provided it was a success then it would push opinion in favour of a single currency.

The Government also plans to give selected banks a "seal of approval" enabling customers to select ones that permit accounts to be operated in euros without punitive charges. Other legislative steps are also being examined, said Mr Brown, to make the euro easier for firms to use. The measures, he added, formed part of the Government's "prepare and then decide" strategy on EMU.

"In less than 14 months from now a German business selling products to France or the Netherlands will be able to do so without exchange rate risk, with lower transaction costs and with more transparent prices, something that in itself will pose a big challenge to a British competitor hoping to supply the same order," the Chancellor said.

That was why it so vital to begin preparations now for the single currency. These preparations, he added, were "too important to leave to dogma or internal party politics and too important to leave aside for years more of indecision and drift."

The advisory group of business leaders, trade unions and consumer groups set up to advise the Government on EMU preparations will report to Mr Brown in December and he will publish its findings in the New Year. There will then follow a series of conferences throughout the country to make businesses aware of the practical steps that need to be taken.

Meanwhile, the Treasury yesterday sent out information packs to Britain's top 1,000 firms detailing business preparations for the euro. "We have moved from talking about preparations to making them in practice," the Chancellor told his audience.

Separately, Wim Duisenberg, the Dutch president of the European Monetary Institute and one of the frontrunners to chair the European Central Bank, indicated that Britain would not necessarily have to rejoin the Exchange Rate Mechanism as a precursor to entering the single currency. He said there were other ways of demonstrating stability and said it remained essential that UK economic policies were aimed at further convergence.

William Hague, the Tory leader, entered the conference prepared for a "bare-knuckle fight" with the CBI over his party's opposition to the single currency and walked out with the loudest and longest ovation of all. On a day when economic and monetary union totally dominated debate, everyone from the Spice Girls to Ted Heath got a mention as the arguments over Europe swung one way and then another.

Employing some of the most uncompromising language heard at a CBI conference since Sir Terence Beckett's famous challenge to Mrs Thatcher in 1980, Mr Hague painted an image of financial and social ruin if Britain were to enter EMU.

A single currency, he warned, could mean employees having to accept cuts in wages for the first time since the Great Depression as vicious unemployment black-spots sprang up across the continent. His party, he said, had paid the political price for Britain's humiliating exit from the Exchange Rate Mechanism on Black Wednesday and had apologised to the millions of people who had lost their jobs, their homes and their businesses. "I have apologised for the ERM. I never want to apologise again for following the dictates of fashion."

Mr Hague went on to dismiss the arguments of the pro-European lobby that Britain could not afford to be out of a single currency if the rest of Europe went ahead. "The danger for Britain is not that we will somehow be left behind in Europe. The real danger for us is that Europe could be left behind in the rest of the world."

The Tory leader conjured up an image of the straitjacket of a single currency binding Britain into a world of uncompetitive, inflexible, bureaucratic labour markets, outpriced and outperformed by the rest of the world and incapable of adjusting interest rates to accommodate domestic economic conditions.

"Unlike the ERM the single currency is for all time. British business could find itself trapped in a burning building with no exits. British business needs a hard-headed assessment of the risks involved in a single currency before we consider joining it. And that assessment is only just beginning," he said.

Mr Hague said that EMU supporters pointed to the US as an example of a successful single currency but this ignored the fact that there was a high degree of labour mobility in America while the Government could automatically transfer billions of dollars from prosperous to poor states through federal taxation and expenditure. By contrast Britain had "a long way to go before we can say to people: get on your hovercraft and look for work".

Outlook, page 23

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence