CBI chief plans autumn euro 'vote' after sterling weakens

Industry leaders and ministers said yesterday the rise of the euro against the pound and the dollar has boosted the prospects of Britain joining the single currency.

As the euro edges towards parity with the dollar, leading businessmen have told ministers privately that the pound is now almost at an acceptable level for Britain to join the euro. Since April, sterling has fallen from 61p per euro to just under 65p.

Digby Jones, director general of the Confederation of British Industry, said: "It is going in the right direction. It is not there yet. We believe 69p to 70p a euro would be the lowest it could possibly be to ensure the competitiveness of British business is not harmed by locking in."

Mr Jones said the CBI's two most important tests for euro entry would be the exchange rate and maintaining labour market flexibility. He disclosed that in the early autumn, the CBI will sent "factual guidance notes" to its 3,000 members and 180 trade associations, representing a further 250,000 firms, before they vote in an internal "referendum" on whether Britain should join the single currency. The result of the CBI poll could have a significant influence on the nation's debate if Tony Blair asks the British people to vote in a referendum next year.

Mr Jones admitted opinions in the CBI were divided. Sir John Egan, the incoming CBI president, said in May he was "sceptical." The last CBI survey, in 1998, showed 52 per cent supported entry, more than 30 per cent wanted to wait and see, while only 15 per cent voiced opposition.

Mr Jones said the euro-sterling rate would have to be sustained and the position of the dollar would also have to be taken into account. He said: "Because Britain is one of the most important trading nations, the relationship between sterling and the dollar, and then the dollar and the euro, are also extremely important in this debate." One Cabinet minister said: "Our contacts with industry suggest the exchange rate is moving business opinion in favour of the euro. One of the biggest obstacles is being removed."

Pro-euro ministers have welcomed sterling's fall against the euro. One said: "What is happening on the exchange rate front is very significant." Outside experts believe the Government has set a target of 67p for joining the euro. The Treasury refuses to discuss the rate, and officials insist the pound's recent fall would have to be "sustainable".

In a letter to Labour peers, Lord Radice of Chester le Street, a board member of Britain in Europe, said: "The recent rise in the value of the euro is psychologically important. It also makes it easier to find a sustainable exchange rate at which Britain might join."

The anti-euro No campaign will today launch a cinema advertisement featuring comedians Harry Enfield and Vic Reeves.