Redwood's single currency warnings leave CBI unmoved

Dire warnings of an impending economic nightmare if the UK joined a single European currency received little obvious support from CBI delegates in Harrogate yesterday in a clear sign of confidence in monetary union.

The CBI's high-profile debate on EMU saw John Redwood and Sir John Hoskyns, chairman of the Burton group and a former adviser to Lady Thatcher, putting the Eurosceptic case across the table from two leading advocates of EMU, Sir David Simon, chairman of BP and Peter Sutherland, chairman of investment bankers Goldman Sachs International and former head of the Gatt world trade organisation.

Mr Redwood claimed the switch to the euro would cost UK firms billions of pounds with only marginal benefits in terms of reduced transaction costs. Arguing that the underlying agenda of Helmut Kohl, the German Chancellor, was political, he said: "He wants to build a country called Europe, governed from a City called Brussels with its economy directed from a bank in Frankfurt."

If Britain stepped up its opposition to EMU, Mr Redwood suggested the Government could still have a slim chance of stopping the single currency altogether.

The biggest applause, however, came after Sir David's rousing pro-European speech, liberally sprinkled with cricketing metaphors, and a savage attack on Britain's long history of currency devaluations. Sir David said fixing the pound to the ecu would act as a spur to business competitiveness, no longer shielded by a depreciating pound.

"If devaluation was the key to successful economic management we should be the wealthiest country in Europe, bar none," he argued.

He concluded: "We can't be half pregnant. Sooner or later we will have to make a choice. There isn't an option of sitting on the fence, both ears to the ground, waiting for the iron to enter our soul."

Mr Sutherland said Britain should join the single currency in the first wave in 1999, insisting that the UK had given up its sovereignty by signing up to the Single European Act and agreeing to extend qualified majority voting.

"If the issue of sharing sovereignty is raised in principle as opposed to its application then the debate is really about membership of the Union," argued Mr Sutherland. However, Mr Redwood denied that he was calling for Britain to leave the EU altogether.

The blackest warnings of economic doom came from Sir John Hoskyns, who claimed EMU was "a complete dud" and "the biggest defensive merger of all time". Changing the currency would cost retailers across the EU pounds 22bn, Sir John estimated. He said EMU was the result of "self-deception, sloppy thinking and creative accounting".

Just one delegate spoke from the floor in favour of the Redwood and Hoskyns side, with seven speeches backing Sir David and Mr Sutherland.

The reaction endorsed the CBI's opinion poll this week showing 56 per cent of firms supporting the principle of EMU. Despite this, as the conference closed, CBI leaders continued to back the "wait and see" approach adopted by the Government and Labour. "The reason we didn't put the issue to a vote on the conference floor is that the pro-EMU side would have won so decisively," a CBI source admitted.