Manufacturing Remains Unconvinced Of Case For Euro According To EEF Survey

Business remains unconvinced of the case for the euro according to a survey of engineering and manufacturing companies carried out for the EEF (Engineering Employers Federation) by MORI. The survey, possibly the last of business opinion ahead of a general election, also demonstrates that businesses have significant concerns about further involvement of the EU at national level in the areas of taxation and social policy and that these impact on their attitude towards the euro.

EEF Director-General, Martin Temple, said:

"Whilst the survey shows that Business is committed to the European Union as a key part of our future growth, there is strong opposition to the level of European Commission involvement in other areas such as social policy and taxation. It is clear that opinions on the euro's introduction could swing either way over the next few years depending on whether these concerns are addressed by the UK Government."

Key findings:

• EEF companies are highly divided on the euro with almost two thirds lying in the most uncommitted groups. 36% suggest Britain should wait and see before making a commitment and 29% support joining in principle but are opposed to setting a timetable.
• 74% of companies said they would in principle support the euro if all their concerns were answered, with only 22% still opposed to entry. This suggests that business opinion could swing strongly against or for the euro in the next few years.
• Companies supporting the euro, 21%, outnumber those opposing it, 14% by three to two. Some 8% of companies suggest Britain should never join the euro and a further 6% say it should not be before 2007.
• Since the last time EEF members were surveyed in 1999, the number of 'cautious' firms (wait and see or support but no timetable) has increased at the expense of committed Euro supporters. However, the number of opponents of the euro has stayed virtually the same.
• A significant strengthening in the euro against the pound would make 59% of members more favourable to the single currency's introduction, while measures to reduce the legislative powers of the European Commission would make 56% more likely to support it. These are well ahead of the 32% of companies that would be positively influenced by strong government support for the project.
• Conversely, any attempt to increase economic integration would make 49% of companies less favourable towards the euro.

As well as addressing companies' attitudes towards the euro, the survey also examines the strategies companies are adopting in the face of growing international trade-unions; how this affects their attitude towards the EU in general and the euro in particular, and how the circumstances of companies in different industries and markets impacted on these attitudes:

• Currently, 35% of companies locate part of their production abroad and half expect to do so within the next five years. 62% of companies have purchased components abroad to protect them against the unfavourable exchange rate of the last three years This has important implications for any further hollowing out of the UK's manufacturing base.
• Four fifths of companies are involved in exporting and three quarters of them sell some of their output to the EU.

Should the Government choose to raise levels of support for the euro amongst the business community the survey suggests must take steps to address the concerns of business, especially any extension of powers of the European Commission.

"If the government wishes to influence business opinion ahead of a potential referendum, it will need to start addressing some of their concerns about the growing influence of the European Commission on the environment in which they operate." Said Mr Temple.

The results of the survey carried out by MORI are based on 500 telephone interviews with Chief Executives, Managing Directors and Board members of EEF companies, conducted between 3rd and 19th January 2001. The profile of respondents matches that of EEF members by size and sector. Data are unweighted.

The EEF (Engineering Employers Federation) is the largest sectoral representative body in the UK, representing almost 6000 engineering, manufacturing and technology based companies.

EEF Europe Survey Topline Results