Siemens chief laments `UK Europhobia'

The head of UK operations for Siemens, the German electrical engineering giant, yesterday made one of the strongest attacks yet from the business community on the Government's increasing hostility towards joining the single European currency.

Jurgen Gehrels, chief executive of Siemens in the UK, said the company would never have committed itself to investing up to pounds 1.1bn in a state of the art micro-chip plant on North Tyneside had he realised the possibility that the UK would decide to stay out of the single currency.

Speaking before Siemens' annual UK results presentation in London, Mr Gehrels said: "If it had been clear that Britain would be out of a single currency at the time we invested in North Tyneside then that decision would have gone another way."

Describing the "crazy" problems for Siemens associated with doing business in 14 or 15 European currencies, he continued: "If Britain really decides to stay out for ever that would be very serious."

The attack also suggested that the continuing uncertainty over the issue of Economic and Monetary Union could influence Siemens plans to invest up to pounds 1bn in the UK by 2001 on internal expansion and buying other businesses. The growth plan outlined yesterday envisages the company's British sales surging from pounds 1.5bn to pounds 4.4bn over the same period, with the workforce growing from 11,000 to 18,000.

Siemens' UK division is one of the longest established parts of the empire, which this year celebrates its 150th anniversary. The company's British subsidiary was created in 1858, manufacturing and laying submarine cables for the expanding telegraph network.

However, Mr Gehrels did have some good news for workers on North Tyneside, pledging that second phase of the plant would now go ahead despite the crash in world-wide semiconductor prices.

Siemens had previously said it was reviewing the investment following the 75 per cent drop in micro-chip prices last year. Mr Gehrels said that the timing of the second phase of the investment depended on the recovery in chip prices, which he believed could take two years. "There is absolutely no question whatsoever that Siemens will go back on its commitment to that site," Mr Gehrels said.

Siemens yesterday revealed a 16.4 per cent rise in UK sales last year to pounds 1.5bn, with a 13.5 per cent jump in new orders to pounds 1.75bn. The group forecast that turnover during 1997 could grow by 50 per cent as new joint ventures in the telecommunications market came on stream.

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