June 27, 2006 | posted by Michael Baxter in Uncategorized |

Grant Thornton have been polishing the chestnuts. These days, with the euro economy only very gradually recovering from years of tottering on the brink of recession, while the UK has done very nicely thank you, the debate about whether the UK should sign up to the euro has been forgotten by many. In truth it’s difficult to make a strong argument for joining the euro at the moment. Take a look at Spain. Here is a nation whose economy was at a different stage of the economic cycle from most other eurozone members. When the rate of interest in the region was too low for the German economic machine to start grinding away, in Spain it was too high. As a result, many fear the economy has overheated, house prices rose by 120% between 1997 and 2005, and there are warnings that Spain is danger of falling into a boom bust cycle once typical in the UK. Now Grant Thornton has revisited that old chestnut of whether business leaders want the UK to join.

We are sure it will come as little surprise to you to learn that support for the UK joining the euro is at an all time low amongst medium sized companies in the UK.

The Grant Thornton survey found that just 32% of medium sized companies polled are in favour of entry, that’s down from 42% last year, and 50% the year before. Apparently, only in Northern Ireland - where the trading links with its Eurozone neighbour are strong, does euro entry have more than 50% support.

The survey found that Germany is our biggest trading partner amongst the companies polled with France second and the US third. But, trade is down on recent years, with Jim Rogers, Head of Growth and Strategic Services at Grant Thornton saying: “We were very surprised that the proportion of businesses in the EU that export is actually lower now than in 1993, when the Single European Market was completed. For UK exporters this reflects the weakness of demand from Germany, the major export market, and lower Asian labour costs. This is a real worry as relying on domestic demand could lead to problems if there is a economic downturn in the UK.”