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Lagging Behind:Britain and the Euro
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The debate about the euro in Britain has changed dramatically since the introduction of euro notes and coins on 1 January 2002. This shift should give pro-Europeans every confidence that a referendum on the single currency can be won. Consequently, it has already left anti-Europeans appearing disheartened and disoriented. This historic changeover to the euro was obviously a profound change for the 300 million citizens of the twelve European Union countries that adopted the currency. It was a revolution on Britain’s doorstep that has practical implications for most British citizens. Most obviously, Britons make 40 million visits to the euro-zone every year, either on business or holiday. From 28 February, when the old European currencies were finally withdrawn from circulation, these visitors will have to use the euro exclusively. In addition, tourists from the euro-zone are expected to make 13 million visits to Britain this year. Those visitors will come here with euros in their pockets, thus any British business that is able to deal in euros will have a significant advantage in competing for European tourist business from now on. There is already some anecdotal evidence of hotels that do not accept euros losing out to those that can. More worryingly for the British economy, there is a serious risk that European tourists may choose to holiday within the euro-zone rather than incurring the money-exchanging costs and extra inconvenience that a trip to Britain would entail. British firms have every reason to complain that the British government did not do enough to prepare business for this momentous change. More could and should have been done. After all, two years ago the government spent £60 million raising public and business awareness of the millennium bug, and £380 million tackling the threat to its own systems. It even set up a company, Action 2000, to give the issue a high-profile. By way of contrast, Gordon Brown, the Chancellor of the Exchequer, disclosed in November 2001 that the Treasury had only spent £9.9 million on preparing British firms for the introduction of the euro. This negligence on the practical question of preparations for the euro may well leave British businesses vulnerable in commercial terms. The Impact of 1 January Prior to 1 January, most British people took little interest in the issue of whether or not Britain should join the single currency. The euro was an intangible, virtual currency. Although it had already had a major impact on British businesses, it was not a visible reality for the vast majority of British people. In fact, most British people knew little about the euro; as a result, they told opinion pollsters they did not support British membership of the euro yet. However, public opinion polls carried out since 1 January have showed substantial rises in public support for the euro. Although it is expected that support will fall away in the coming months, it indicates that opposition to the euro is shallow and moveable. Support for joining the euro among British business has risen dramatically over the past few months. An HSBC survey of 14,000 companies, mostly small and medium-sized, carried out after 1 January, showed that 61 percent now believe that euro membership would benefit their company. The figure was only 23 percent in 1999. The annual MORI Captains of Industry Survey of FTSE 500 senior board directors found that 59 percent would like Britain to join the euro in the near future. The figure was 44 percent in 2000. Additionally, polls show rising public and business support for a sooner rather than later referendum on the issue. A recent Institute of Management survey found that 64 percent of managers think that 2002 should be the year the government makes clear its timetable for British entry. Significantly, a poll of public opinion carried out in February 2002 found that 67 percent of the general public wanted the issue resolved soon by a referendum. As a result of this dramatic shift in public opinion, and the momentum that it has given to the pro-euro campaign, speculation is growing that the government will call a referendum in the Spring of 2003. Pressure from business and political leaders for the government to announce its intentions has been intense. The introduction of the euro has made people aware that there is a political and economic price to be paid for Britain’s isolation from the new currency.
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