EDITOR'S LETTER: Richard Young

So, Tony Blair has finally admitted that the high value of sterling might be having a detrimental effect on British industry. 'On manufacturing, let us be clear the problem particularly for those selling into Europe is the strength of the pound,' he told the Commons in the second week of May. This was, according to reports, the first time he had made such a statement. And Peter Mandelson has admitted: 'The fact is that as long as we are outside the euro, there is little we can do to protect industry against destabilising swings in the value of sterling as they affect trade with Europe.'

The sheer weight of evidence of the damaging effect of the falling euro (let's not be too hard on sterling) on farmers, manufacturers and even the financial sector should have impelled ministers in general and the PM in particular into action sooner. But what can the government do? The irony is that rather than becoming a weak currency by being left out of the euro at the start, sterling has, relatively, become a strong currency. And therein lies the problem.

Joining the euro at this level would, by common consent, be a Bad Thing. But lowering interest rates for the purpose of bringing the pound down is off the agenda, and the ECB has continually said it won't take direct action to artificially strengthen the euro (even if it was confident of succeeding through market intervention - which it probably isn't).

So we are in for tough times. Perhaps what we'd really like to see is a more open debate by the government. If there is still an argument raging inside the Cabinet about the merits of joining the single currency, it ought to be sorted out, and soon, so that as a country we can start getting used to whatever policy they choose (at least the Tories have stuck to their 'no' stance).

Labour-supporting tycoon Gerry Robinson pointed out recently that it is starting to look faintly ridiculous that our businesses operate on the fringes of a currency bloc they are still not part of. So, if Europe is where we're going, and if joining the euro is actually what New Labour wants to do, then let's hear about it. Return to the Financial Director website