Redwood to campaign against single currency

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The Independent Online
John Redwood, the former Welsh Secretary, is to launch a campaign next week to mobilise business opinion against European Monetary Union

In his most significant initiative since his leadership challenge to John Major in the summer, Mr Redwood is setting out to maximise City and industry support for a concerted effort to persuade Mr Major to rule out a single currency.

Mr Redwood will build on a 70-page pamphlet he is publishing in a week's time setting out the economic arguments against British EMU membership by holding a series of seminars for businessmen and industrialists.

His move, if successful, threatens to disturb the uneasy but so far stable truce within the Conservative Party over a single currency. Mr Major has up to now managed to hold the ring between pro- and anti-Europeans by relying on the opt-out clause in the Maastricht treaty.

According to recent polls, about one in four businessmen is strongly in favour of monetary union, one in 10 strongly against and about two- thirds uncertain. With business opinion divided, Mr Redwood, who had City experience before entering politics, believes he can harden opposition against EMU, particularly since polls of businessmen also show opposition to further EU integration.

His move has been timed to apply pressure to the Government in the run- up to the Madrid summit - at which EMU will be high on the agenda - in a fortnight's time. But he will continue pressing his case after the summit and into the run-up to the general election.

Although Mr Redwood wants Mr Major to rule out a single currency during the next Parliament, he will argue that at the very least the Prime Minister should commit himself to a referendum in the event of it becoming a live issue.

Mr Redwood will argue that the variability of business prices and output will significantly increase as a result of a single currency, and that the strains of fluctuations in trade currently taken by movements of the exchange rate will instead result in an increase in unemployment.

At the same time, he will argue that smaller businesses whose trade is mainly domestic will face increased costs because of changes of equipment to cope with a new currency without any tangible benefit. He estimates that about three-quarters of British businesses will face extra costs without extra benefits.

He will also seek to demolish the argument that failure to join the single currency will hamper Britain's ability to exploit the single market. A number of countries, including Portugal, Italy, Greece and Belgium are likely not to be members and, in any case, the single-market provisions are guaranteed by the treaty provisions of the Single European Act. Trading freedoms are also guaranteed by the General Agreement on Tariffs and Trade.

Mr Redwood also believes large sections of the UK's invisible earnings could leave London for Frankfurt in the event of Britain joining a single currency, as London-based banks move in order to have a closer relationship with the new regulatory authorities attached to a European Central Bank.