Letter: Futile challenge to the euro

Sir: None of the politicians who want us to cling on to a weak national currency tell us how they will protect the pound from a rush into the euro, which will be backed by currency reserves many times ours and will be traded in a rich market of at least 200 million customers.

At present the yield on UK corporate bonds is 30 per cent higher than it is in the core countries of the euro, France, Benelux and Germany, so their industrialists can put down 30 per cent more investment for the same interest cost, leaving us to tag along with older and older products. Sure, we want our labour costs to be competitive, but industry today is capital-intensive, and if our industry does not have a level playing field on the cost of capital now, what interest premium will they have to offer when there is a common European currency as strong as the German mark and far more widely traded? And if we cannot keep up with their investment, how can we balance our trade and keep our people at work?

Sir FRED CATHERWOOD

Balsham, Cambridgeshire