The Prime Minister yesterday came under pressure to hold an urgent summit on the impact of the strong pound and to devise measures to bring down its value.
Roger Lyons, leader of the Manufacturing Science Finance (MSF) union, one of the Labour Party's biggest financial backers, warned that manufacturing was "on a precipice", and that urgent action was needed.
"Everybody seems to be moaning and groaning that the pound is overvalued. Even the Government acknowledges there is a problem. What we need to do now is to get round a table and discuss solutions to that problem."
Mr Lyons made his call at his union's annual conference in Harrogate, arguing for a high-powered meeting of ministers, senior civil servants, Bank of England representatives, employers and unions. The MSF general secretary believes the terms of reference of the central bank's Monetary Policy Committee should be changed so that it can assess the effect of interest rates on sterling, exports and employment.
Currently, the committee's primary responsibility is to keep inflation under control. Instead of keeping interest rates steady last week, the committee could have reduced them by a quarter of a point and still met inflation targets, he said.
"The MPC was responsible for the biggest single increase in the cost of living in the last six months - the rise in mortgage rates," said Mr Lyons.
He also contends that part of the £22.5bn the Government raised from the auction of mobile phone licences last month could buy eurobonds. That would show that the Government had a commitment to convergence, it would weaken sterling and help to align the pound with the euro in preparation for a UK decision to join the single currency, he said.
"Sterling appreciated by 13 per cent last year... which means we would have needed a 13 per cent improvement in productivity simply to stand still. The Government must respond to the crisis. Manufacturing is on the ropes," Mr Lyons said.
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