The Treasury select committee is currently undertaking an inquiry into "Britain and the euro".
Committee chairman John McFall responds to comments on the subject from ePolitix.com Forum members.
John McFall, chairman for the Commons Treasury select committee, told ePolitix.com: "I am grateful to Forum members for their responses to my request for their thoughts on the issue of the UK and the euro.
"I agree with those members whom believe that British entry of the euro would be a momentous step. It is because of the magnitude of the choice facing us that I strongly believe there must be a deeper and better informed public debate.
"It is reassuring to find that members will, in their own opinion, be following the committee's discussions with interest, and that they, like me, feel that a proper public discussion will be vital if and when a referendum will be held.
"I would again like to invite visitors to ePolitix.com to give their opinion on the UK and the euro by emailing euro.inquiry@epolitix.com.
"I can assure Forum members that their submissions will be discussed by the committee and will form part of the evidence of our report."
Forum Response: Federation of Small Businesses
A spokesman for the Federation of Small Businesses told ePolitix.com: "As far as the FSB members are concerned, the first year of the euro has been a non-event for them and they have not taken much notice unless they were exporters or importers.
"FSB members are very happy with the Bank of England's low interest rates and low inflation and don't want to dislodge the good work of Eddie George. Ultimately members are saying leave things as they are as far as the euro is concerned."
Forum Response: Barclays
A spokesman for Barclays said: "Barclays takes a neutral position to whether entry to the euro is good or bad for the UK. However regardless of when or if the UK enters, working with the euro is a reality for many British businesses today and we are working to help our customers to understand the implications of the single currency on the operation of their accounts."
Forum Response: Institute of Directors
Ruth Lea, head of the policy unit for the Institute of Directors, told ePolitix.com: "British membership of the euro would be a momentous step with enormous political and economic implications. It would mean, effectively handing over the management of the British economy from British institutions to EU-wide institutions.
"Handing control over, without 'sustainable convergence', could seriously risk damaging economic stability, business success and job prospects.
"By comparison, the advantages of British membership are modest indeed. Of course, while we recognise that some large international businesses see advantages in being able to plan and monitor the performance of their overseas operations by being in the euro, IoD members are still of the opinion that Britain should not join for the foreseeable future for business and for jobs."
Forum Response: UNIFI
A spokesman for UNIFI told ePolitix.com: "UNIFI went through a long process of informing and consulting with its members including the publication of an in depth unbiased explanation of the economic, social policy, industrial relations and finance sector implications of the UK joining the euro."UNIFI believes that the implications of entry into a single currency are overwhelmingly positive and supports UK entry into the euro on the condition that the chancellor's five tests are met and that a sustainable exchange rate between the pound and the euro has been achieved.
"UNIFI does have concerns that the Stability and Growth Pact will be used to justify restrictions on public spending and joins the TUC in calling for assurances from the government about the impact of entry on public spending.
"UNIFI is also concerned that the assessment of the fourth test may take too narrow a focus on just the City of London and not sufficiently investigate the potential impact on financial centres elsewhere in the United kingdom and other areas of the financial services sector such as retail financial services."Forum Response: Business Services Association
Norman Rose, director general for the BSA, told ePolitix.com: "The euro is an accepted part of international business life. With 12 members it has become the premier currency of Europe for multinational businesses.
"Accepting that it is necessary for the chancellor to satisfy himself that the relevant economic convergence tests have been met and that we, as citizens of the UK, will than have the opportunity to vote on whether to seek entry to the euro, the longer this is delayed the more damage it causes to British businesses trading across Europe.
"They still have to treat the euro as a foreign currency, there are still exchange rate issues which have to be addressed and interest rates remain higher and some investment decision will be delayed. These are disincentives for UK companies and even greater ones for those considering inward investment.
"Whatever the outcome, Business needs a clear, quick resolution of the current uncertainties. Government owes it to us so we can continue to create the wealth which keeps the economy healthy."
Forum Response: GMB
John Edmonds, general secretary of the GMB, said: "British manufacturing continues to be in crisis because we remain uncertain in adopting the euro. This has become a major factor in deterring multinationals from investing in Britain while the euro and the pound remain worlds apart.
"We will continue to see these job losses despite best efforts. The only way to protect British jobs is to join the euro as soon as possible and at a realistic exchange rate. If we don't we will continue to see the manufacturing industry plummet."
Forum Response: Lloyds TSBA spokeswoman for Lloyds TSB told ePolitix.com: "Lloyds TSB does not express a corporate view on the wisdom or otherwise of the UK joining the single currency. There will be a referendum held before entry in which people will be able to vote freely on the issue.
"If the UK decides to join EMU, we believe that it will take approximately three years to adequately prepare. We are awaiting clearer commitment from the Government before investing the substantial sums that will be required.
"Our approach is a practical one: if the UK joins, our key goal will be to ensure our customers have the necessary support and services they require both during the transition period, and when sterling is withdrawn.
"Lloyds TSB values the work of the Treasury select committee which will promote debate and enhance public understanding of this important issue. We are following the discussions of the committee with interest and feel that proper public information, and understanding of the issues, will be vital to a well-run referendum, if one is called."
Forum Response: Chartered Institute of Personnel and Development
John Philpott, chief economist at the Chartered Institute of Personnel and Development, said: "As a member of the economic council of Britain in Europe I support UK membership of the euro. However, this note is intended as a balanced assessment of the jobs test.
"Of the Treasury's five tests, that concerning jobs is perhaps of most concern to working people. So would joining the euro be good for, or harmful to, employment in the UK?
"Despite all that is being said and written about the euro, there are no at present no precise estimates available of the likely impact on jobs. Yet it is also clear that concern about jobs features strongly in the arguments deployed to either support or oppose UK membership of the euro.
"Although it might be difficult to provide a precise estimate of whether the euro will ever pass the government's 'jobs test' plenty is being said about the potential effect. This viewpoint thus highlights 10 key economic issues:
"Joining the euro will affect the way in which aggregate level demand is managed in the UK economy in order to maintain stability and keep inflation in check. Whilst this can have important short-run effects on employment/unemployment, there is no long-run trade-off between inflation and the amount of employment/unemployment the economy can sustain.
"The number of jobs in the economy is ultimately determined on the supply side. Membership of the euro is thus unlikely to have either a positive or negative direct effect on the underlying structural rate of unemployment in the UK.
"The euro 'jobs test' remains valid nonetheless. Jobs enter the euro debate in a number of important ways. These relate to:
(1) economic convergence between the UK and the eurozone economies;
(2) whether there is sufficient flexibility in the UK and EU economies and/or adequate fiscal policy adjustment mechanisms to cope with economic shocks;
(3) the value of the pound on entry to the euro;
(4) the conduct of monetary policy by the European Central Bank;
(5) the impact of failure to join the euro on inward investment and the UK's position within the EU;
(6) the possible indirect effect of euro membership on structural employment/unemployment and the influence of so-called Social Europe legislation.
"Continuing cyclical divergence between the UK and the rest of the eurozone raises the possibility that the ECB would set interest rates either too high or too low at any particular point in the economic cycle - increasing the risk of unstable periods of 'boom and bust'.
"Linking the issue of convergence to that of jobs, a balanced assessment based on current opinion would seem to indicate that there might be risks to job stability from early entry to the euro albeit it would be wrong to assume that sustainable convergence cannot be achieved over time.
"It is difficult to assess whether the UK could deal effectively with isolated shocks having joined the euro. Views differ not only on whether such shocks are likely to prove a greater problem than exchange rate volatility but also on whether the labour market is flexible enough to respond. What is clear is that EMU raises important questions about the role of domestic fiscal policy as a tool of macroeconomic management as well as about the adequacy of cross-border fiscal transfers within the eurozone.
"The current consensus of opinion suggests that the long-run comfort zone for the pound as far as UK industry is concerned is around 10-20 per cent below the current parity with the euro.
"There is no guarantee that sterling will fall to this level automatically so early entry would probably either have to occur at the current high market rate or involve some negotiation between the UK and its European partners to secure entry at a lower rate. How this is to be achieved, and over what timescale, seems to be a critical question facing those in favour of early UK membership of the euro who are concerned about the consequences for jobs.
"An assessment based on initial experience suggests that the ECB's anti-inflation priority is unlikely to prove detrimental to UK jobs. Despite this the ECB should operate in as open and accountable a manner as possible, perhaps akin to the UK's MPC. There is also considerable scope for reform of the Stability and Growth pact, which should be more responsive to the state of the economic cycle as experienced by euro members.
"Fears that failure to join the euro will hurt jobs by curtailing inward investment or loosening the UK's commitment to EU membership seem exaggerated. Moreover, insofar as this were to occur the impact would fall largely on productivity and UK living standards, rather than employment.
"A balanced assessment of the strengths and weaknesses of the European Social Model offers comfort to Europhile and Europhobe alike. An overall assessment thus suggests that an appropriate stance towards the European Social Model should be one of constructive criticism rather than crude defence or attack. And the same should apply to Social Europe.
"In order to enable the EU economies to acquire the flexibility needed to operate a successful EMU, and cut high rates of structural unemployment, sensible reforms are required to overcome the weaknesses of the European Social Model while building on its strengths. In this respect it will be important to ensure that Social Europe operates in tandem with the emerging European employment strategy.
"A decision to join the euro will be based as much, if not more, on political rather than economic considerations. In practice, however, it is difficult to separate the economics from the politics on this important issue since the decision on euro membership will clearly affect the UK's relationships with its EU partners.
"Perhaps the ultimate jobs test facing the government is that of whether efforts to promote a prosperous full employment UK, and a full employment Europe, are likely to prove more successful inside or outside the eurozone."
