Toyota tells its British suppliers to use euros

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The Independent Online

The Japanese car giant Toyota revealed yesterday that it had told its British suppliers to bill in euros, increasing the pressure on ministers to abandon their "prepare and decide" position on the single currency.

The Japanese car giant Toyota revealed yesterday that it had told its British suppliers to bill in euros, increasing the pressure on ministers to abandon their "prepare and decide" position on the single currency.

Toyota, which is the world's third-largest car company and has two plants in the United Kingdom, said it had told components suppliers to stop billing in sterling because it was losing money through the strong pound. The move follows threats by the car maker Nissan and the electronics firm Matsushita to move production to continental Europe if Britain does not adopt the euro.

A Toyota UK spokeswoman stressed there were no plans to shift component sourcing to Europe, but did confirm that the company had asked suppliers to "quote for new business in euros rather than sterling. The suppliers also find that removing the risks of currency fluctuations in the future is good for business planning," she said. "As we have said before, Toyota UK seeks opportunities to achieve cost reductions wherever possible and appropriate."

Responding to Toyota's announcement, the Cabinet Office minister Lord Falconer of Thoroton hinted that Gordon Brown, the Chancellor, should take heed of the company's move.

Lord Falconer, who is understood to be a keen europhile and is close to Tony Blair, told the BBC Radio 4 Today programme: "It is obviously a factor that will play into an analysis of the economic tests that the Chancellor set out in his October 1997 statement. It will go to the question of flexibility.

"The position is that we in principle think it is a good thing to join the euro if it is in the economic interests of this country."

Alan Duncan, the Conservative trade and industry spokesman, said that Lord Falconer's remarks proved he wanted to pressure the Chancellor into a more pro-euro stance. "The vast majority of British businesses that want to trade in sterling should be able to continue doing so. That's why the Conservatives will be fighting to keep the pound at the next election," Mr Duncan said.

Pro-euro groups and trade unions seized on the Toyota announcement as proof that the UK's membership of the single currency was now inevitable.

Sir Ken Jackson, general secretary of the AEEU engineers' union, said Toyota's decision proved major European exporters did not want the uncertainty of exchange-rate fluctuations. "We can sympathise with Toyota's decision but this will have a huge impact on the motor components sector, who will have to bear the brunt of currency fluctuations," he said.

Edward Roberts, chief executive of component maker Peterson Springs, in Redditch, Worcestershire, which supplies Toyota indirectly, said his company was now being made uncompetitive by the strong pound. "It's really beginning to disadvantage us," he said. "This is a global business and if the customer wants us to deal in yen, euros or whatever, then it's a case of fitting in or losing the business."

Business was divided, with the Confederation of British Industry saying the decision was "understandable and logical", but the Institute of Directors pointing out that a survey of large multinational companies in 1999 found onlytwo per cent would discriminate against Britain for remaining outside the eurozone.

Sir Michael Edwards, former chairman of British Leyland and council member of the Eurosceptic group Business for Sterling, said that the decision should not affect Britain's attitude to joining the euro. "If we joined EMU just because companies like Toyota have special problems, every company would suffer from the wrong interest rate, higher taxes and more red tape," he said.

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