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Last Updated: Monday, 9 June, 2003, 16:31 GMT 17:31 UK
Brown 'didn't go far enough'
5 euro and 10 pound notes

Chancellor Gordon Brown's caution on euro entry does not go far enough, long-time euro opponents in the business community have said.

But industry's backers of the single currency have welcomed the chancellor's rhetoric in favour of eventual entry.

The Institute of Directors says it is disappointed that Mr Brown plans to re-examine the case for membership of the euro next year.

"We strongly believe that the British economy has not yet attained sustainable convergence with the rest of the eurozone and that we, therefore, could not live happily with the ECB's interest rates," said Ruth Lea, head of the IoD's policy unit.

"Moreover, and crucially, we cannot see how the British economy will meaningfully attain sustainable convergence with the rest of the eurozone over the next two-three years."

Mr Brown is rightly making EU reform a centrepiece of UK government policy
Digby Jones
Director general, CBI

Mr Brown stressed the need for a "clear and unambiguous case" that the UK was ready to join.

There was not yet sufficient convergence between the UK and the 12-nation eurozone or flexibility to deal with any problems that might emerge, he warned.

More flexibility

But the IoD's assertion that Mr Brown should rule out re-assessing Britain's economic readiness for euro membership for the lifetime of this Parliament was challenged by employer group the CBI.

"It is good for business that the Chancellor left other countries in no doubt about the UK's commitment to the European Union," said CBI director general Digby Jones.

And he had praise for the "rigour" of the assessment, which stressed the need for policies to encourage further convergence with the eurozone - not to mention his call for greater flexibility in the way the euro functions.

"Mr Brown is rightly making EU reform a centrepiece of UK government policy," Mr Jones said.

In a dig at opponents who call for the government to commit to staying out for five years, he went on: "No government should force the facts to fit a predetermined point of view."

'Not yet' or 'not likely'?

"I very much welcome the emphasis today on preparing for euro entry," said Brendan Barber, general secretary of the Trades Union Congress.

The country has many much more important things this government should be worrying about
Jan Hruska
Chief executive, Sophos

"It's definitely a case of 'not yet', rather than 'not likely'."

The statement would be welcomed by industry as a clear roadmap to entry, he said - and by unions as a further prop to introducing European social protection to the UK.

"The mood music has changed decisively today. We now have a project with a purpose," Mr Barber said.

'No delay'

Carmaker Ford UK agreed, saying that euro entry was important for stability and competitiveness in the long term.

Removing uncertainty was now the task ahead, said Ford of Britain chairman Roger Putnam.

"We accept the Treasury's current rulings on the economic tests and particularly welcome the potential benefits identified for UK trade and growth," he said.

He went on: "Any unnecessary delay in adopting the euro is detrimental to UK manufacturing and the many companies that need a stable and competitive landscape."

'In suspense'

But other businesses were much less reassured.

Oxfordshire-based Sophos makes anti-virus software for computer systems, and its chief executive, Jan Hruska, was unsurprised but disappointed by the chancellor's speech.

"He should have said - for the sake of argument - that there will be no more of this 'yes euro, no euro' stuff," he told BBC News Online.

"Business doesn't like uncertainty, and this just prolongs the uncertainty."

The uncertainty would make trouble for Sophos' customers and thus for the company itself, he said.

But that was less important than the knock-on effects of keeping the country in suspense - and of distracting the Treasury from other matters.

"The country has many much more important things this government should be worrying about, from sorting out the NHS up," he said.

The FTSE 100 index of leading UK shares was little moved by Mr Brown's speech.

By the close, the FTSE was down 22 points at 4,129.

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