A letter to the Editor of the Daily Telegraph which was published on 16th May 2003.

Lord Simon of Highbury’s advocacy of Britain abolishing the pound on the grounds that it will assist inward investment in competition with euroland (report, May 14th) sits oddly with the record of his own term as chairman of BP when the vast bulk of its investment went into North America and the Far East, especially China, as it continues to do.

Likewise, claims by Sir Nick Scheele of Ford and others (Business, May 13th) that abolishing the pound will introduce vitally needed “stability” hardly squares with his company’s sourcing its engines for European markets from its factories in Brazil, a country whose currency has changed its value against the dollar by about 70 per cent in seven years and changed its name three times in the past 10.

Rick Waggoner, chairman of General Motors, who has just announced £80 million of actual, not theoretical investment, for Vauxhall’s Ellesmere Port plant, is surely right when he commented that the real issue is not the pound/euro exchange rate, but labour competitiveness.

This was borne out last week when a local engineering factory closed with the loss of 270 jobs, basically due to the fact that the competitive Chinese factory pays £15 a week compared with £330 a week here – a difference of 22 times.

This massive difference is engaging the attention of just about every manufacturing company in the land.  Compared with this, the few per cent variations in the pound/euro exchange rate are a total irrelevance.