City believes EMU is on the way

Poll shows managers split on whether it is a good idea, says John Eisen hammer
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The Independent Online
A substantial majority of senior City managers is convinced that full economic and monetary union in Europe will come about.

But they are evenly divided over whether this will be a good thing.

A Harris poll in December of 250 senior managers from a wide range of City financial institutions showed 73 per cent believed EMU, including the creation of a single currency, was likely to happen, with 57 per cent saying it would occur within 15 years or less.

But when asked whether they personally would like to see EMU take place within the next 10 years, 49 per cent said that they would, while 48 per cent said they would not.

Of the respondents to the survey, 59 per cent believed Britain would not be among the first group of countries to have a common currency, while 63 per cent thought there should be a referendum before taking Britain into a single currency group.

Lynton Jones, chief executive of the London Securities and Derivatives Exchange, which commissioned the survey, expressed disappointment at the low level of support for economic union.

"Given the importance of the City for the British economy, the way this business might be affected by EMU is of vital concern," Mr Jones said. "It is depressing therefore that the debate appears stuck at a rather simple level."

The survey was the first of its kind among senior City executives. Similar questions put by the Confederation of British Industry to its members in November last year demonstrated a more positive attitude, with a large majority favouring a single currency.

While most industrialists thought a single currency would be good for business, the City executives in the latest survey were less convinced.

While 53 per cent of respondents though EMU would have a direct effect on the profitability of their firms, there was no indication whether this might be positive or otherwise.

Of respondents, 38 per cent said EMU would bring about an increase in business opportunities for the City, thanks mainly to the predominance of its financial expertise in Europe, 32 per cent feared there would be a decline and 25 per cent said there would be no effect.

The main factors provoking a decline in business for the City were thought to be the reduction of trading opportunities as a consequence of the disappearance of a number of currencies, as well as the differences between interest rates.

"The prospect of EMU raises crucial questions about our business, what products we plan for and what we do with them," Mr Jones said. "And if Britain opts to stay outside, is it sensible for foreign firms to stay to do business in London?"