The United Kingdom's Position
outside the Euro Zone
57. During our evidence sessions we canvassed the
views of our witnesses on the United Kingdom's position outside
of the Euro zone. Dr Smith of Swansea Business School explained
that he had conducted a survey of the largest businesses in Wales,
alongside a stratified sample of small businesses across Wales,
and business groups and organisations. He told us that he found
that businesses in Wales "were in favour of joining the euro
as soon as possible, and believed that other countries and regions
in Europe that were already in the euro, had substantial commercial
advantages".[122]
58. Our witnesses from the manufacturing sector confirmed
that, in general, their preference was for the United Kingdom
to join the Euro zone. Joachim Reinhart, Chief Operating Officer
of Matsushita, told us that he saw the UK's position outside of
the Euro zone as a disadvantage for Matsushita because it had
a significant amount of trade with countries within the Euro zone.[123]
Furthermore, John Gardner, stated that Ford had been consistent
in "trying to encourage the UK to join the Euro at the earliest
opportunity".[124]
59. However, the underlying reason for that view
was a desire for even greater stability in the currency markets.
Joachim Reinhart welcomed the greater stability between Sterling
and the Euro[125] and
argued that "stability is important, but I think by being
in the Euro zone that obviously increases your stability".[126]
John Barbagallo, Managing Director of Angelesy Aluminium, stated
that while he did not have a "positive or negative view"
on the UK's position, currency stability was an important factor
in profitablility. [127]
Similarly, David Aykroyd of Aykroyd & Sons believed that the
relative strengths of Sterling, the Euro and the Dollar were more
important factors than the UK's position within or outside of
the Euro zone.[128]
60. Brian Fleet, Senior Vice President of AirBus
also saw the strength or weakness of the Dollar as a major concern,
not least because large commercial aircraft were sold using Dollars.[129]
However, he believed that the UK's position outside of the Euro
zone represented a hindrance to Airbus.[130]
Julian Scopes, from BAE Systems did not consider the UK's position
as having a significant impact on BAe's business; but he stated
BAE's desire that the UK to be inside the Eurozone as it would
"provide a greater degree of overall stability on currencies".[131]
Both witnesses put a higher value on stability in the currency
markets than on any policy decision to change the currency of
the United Kingdom.
61. The debate surrounding the United Kingdom's
entry into the Euro zone has often been conducted in a highly
political environment. Therefore, it was enlightening to find
a general level of agreement from our witnesses on the economic
benefits of the United Kingdom joining the Euro zone. In the absence
of such a move, a stable exchange rate between Sterling, the Euro
and the Dollar was considered vital. We conclude that the Government
should place a greater emphasis on the economic benefits and disbenefits
to manufacturing of the United Kingdom joining the Euro zone.
Access to Government
62. The success of those policies depend not only
on the relationship between the Welsh Assembly Government and
the UK Government but also on clear lines of communication and
responsibility that can be accessed easily by business. It is
important that clear advice is given on which institution is responsible
for which aspect of economic policy and assistance. CBI Wales
argued that in the aftermath of devolution there had been a different
approach taken by the DTI on non-devolved matters; "there
is either a reluctance or a nervousness to cross the border. […]
It is no more than a sense but I see no sign of the UK government
actively involved in economic development in Wales.[132]
TUC Wales argued that the immediate aftermath of devolution had
led to some confusion and complications with regard to political
responsibility over economic matters. It stated that "many
business people came to the view that somehow it was the [National]
Assembly they needed to look to rather than the DTI".[133]
However it acknowledged that although the DTI's activity in Wales
went on to the back foot in the aftermath of devolution, that
approach was now being remedied.[134]
The Federation of Small Businesses also saw a different approach
taken to contact with Governmental institutions: "manufacturers
in Wales tend now to deal to a greater extent with the Assembly
rather than the DTI".[135]
The Federation of Small Businesses was of the view that the DTI
was not "any less proactive in Wales than it was".[136]
63. Professor Wahab from Delta Microelectronics,
explained that while he had little contact with the UK Government,
the opposite was true of the National Assembly and the Welsh Assembly
Government. He believed that devolution had been a significant
benefit to manufacturing in Wales "you can access Ministers
very easily at all levels, and your Assembly Members. You can
access different parts of the [Welsh] Assembly Government machine
which is very important".[137]
As a result, more attention was paid to Wales.[138]
He further argued that this situation would be improved if the
Welsh Assembly Government had a greater control over regional
development policy.[139]
64. Often the size of the enterprise appeared to
dictate their involvement with each tier of Government. Anglesey
Aluminium told us that they had good direct contacts with the
DTI and also had an input into the Department through its membership
of the Aluminium Federation in the UK.[140]
At the other end of the scale, Akroyd and Son, explained that
it had "absolutely no contact with the DTI" but had
" a great deal of contact with the WDA"[141]
65. It is clear that the UK Government and the
Welsh Assembly Government are making strides to ensure that their
economic policies complement each other to the benefit of the
Welsh economy. Equally important is the need to demonstrate clearly
to business which institution is responsible for each part of
that policy. In general we conclude that business is aware of
the distinction and, in particular is able to access the Welsh
Assembly Government with ease.
106 Q889 Back
107
Q889 Back
108
Q889 Back
109
www.wales.gov.uk Back
110
Ev290 Back
111
Ev290 Back
112
Ev291 Back
113
Ev291 Back
114
www.wales.gov.uk/themesbudgetandstrategic/content/neds/awinningwales-0302-e.pdf Back
115
Ev289 Back
116
Q847 Back
117
www.wales.gov.uk Back
118
Q843 Back
119
Q895 Back
120
Q895 Back
121
Q895 Back
122
Q452 Back
123
Q96 Back
124
Q97 Back
125
Q97 Back
126
Q98 Back
127
Q291 Back
128
Q292 Back
129
Q164 Back
130
Q176 Back
131
Q176 Back
132
Q344 Back
133
Q523 Back
134
Q523 Back
135
Q623 Back
136
Q623 Back
137
Q729 Back
138
Q732 Back
139
Q731 Back
140
Q271 Back
141
Q294 Back
