Minister plays down industry's problems with strength of sterling

The prospects of early entry into the euro were further dampened yesterday after an industry minister said the strength of sterling was now much less of a concern for manufacturers.

The comments by Alan Johnson, the minister for employment relations, industry and the regions, are in sharp contrast to the warnings delivered earlier this week by Ford and Siemens of the dangers to British industry of staying outside the single currency.

Speaking at the CBI conference in Manchester, Mr Johnson said: "I think it is less of an issue than it was two or three years ago. Talking to manufacturers, the views are mixed. There is no sense in which all manufacturers are saying that the answer to all their problems is the single currency."

Mr Johnson pointed out that a lot of manufacturers traded with the US rather than Europe and that the strong pound was a positive aid to companies that were bringing in exports from the Continent.

He also called on Britain's European partners to back moves to liberalise labour markets. He said that if Europe was serious about creating 20 million new jobs by 2010 – the goal laid down at the Lisbon summit – then Europe had to accept that we needed a flexible labour market. "We shouldn't do anything which damages that," he said.

Mr Johnson acknowledged that manufacturing was under intense pressure but added: "Manufacturers understand there is a global problem with manufacturing. In terms of low wage, low skill manufacturing there's no way we can compete for that business and we don't want to compete on low wage, low skill so these jobs will always move somewhere else."