Weak euro 'creates jobs on the Continent at expense of UK'

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The Independent Online

The strength of sterling against the euro has given a massive boost to manufacturing employment on the Continent at the expense of British jobs, according to a report out today.

The strength of sterling against the euro has given a massive boost to manufacturing employment on the Continent at the expense of British jobs, according to a report out today.

By the end of this year around 400,000 eurozone industrial jobs are likely to have been created since the launch of the euro in January 1999, helped in part by the currency's weakness, Cambridge Econometrics (CE) said. Over the same period government figures showed that around 100,000 UK manufacturing jobs.

All sub-sectors within industry have suffered with food, drink and tobacco tumbling with 10 per cent, and electrical products and industrial machinery falling almost 5 per cent. All sectors, bar two, saw employment grow in the preceding three years.

CE, an independent firms of analysts, said the eurozone had reversed an industrial decline that had put paid to 800,000 jobs between 1995 and 1998.

"Since the launch of the euro, and its falls of almost 30 per cent against the dollar and 15 per cent against sterling, the position has been turned around," it said. Sectors heavily involved in trade, such as industrial machinery, electrical goods and chemicals, had enjoyed a return to growth. "The euro's weakness has limited the extent to which the UK has benefited from the rise in intra-EU trade, and the increasing deficit in the UK's balance of trade in goods," the report said.

CE, which was commissioned by the European Economic Research and Advisory Consortium, said the risk to the single currency zone was that a weak euro would drive up inflation through pricier imports. This could force up interest rates.

The main thrust of the research will come as a fillip to the British pro-euro camp which is still reeling from Denmark's rejection of euro membership.

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