The strength of sterling is threatening jobs in British industry, a survey published by the Engineering Employers Federation (EEF) is expected to show today following a political row over a leaked British government memo warning manufacturing risks "meltdown" if it does not declare in favour of joining the euro.
Three months of decline in engineering in the months to June, the EEF is expected to say, have been characterised by falling export orders and an acceleration in job cuts and bucks the trend of three successive quarters showing improvement in the industry since last year.
The survey is set to fuel the political debate over joining the euro after yesterday's publication of the leaked memo. It was written by Mr Andrew Fraser, the chief executive of the Department of Trade and Industry's Invest in Britain Bureau (IBB). In it he warned the government that foreign investors had a "growing sense almost of betrayal" over its wait-and-see policy.
The row is also set to detract from IBB figures due later this week which are expected to show inward investment levels that will match or possibly increase on last year's record figure of 118,000 secured jobs. Mr Fraser's May 7th memo to the Trade and Industry Secretary, Mr Stephen Byers, warned that despite investment successes there would be a period of "significant and high-profile manufacturing closures" with possible cutbacks at the Japanese-owned factories, Aiwa, Hitachi and Toshiba in Wales and Plymouth.
As Downing Street sought to play down the political fallout over the memo, with a spokesman saying the version presented "sounds pretty exaggerated", the EEF said it showed government policy was increasingly "untenable" and accused the government of playing "Russian roulette" with manufacturing jobs.
The general secretary of the Amalgamated Engineering and Electrical Union (AEEU), Sir Ken Jackson, said the memo reflected the "deep concern" across industry about the effects of remaining outside the euro. And Mr John Monks, general secretary of the Trades Union Congress said: "The high pound is causing enormous problems for struggling manufacturers. The time is now right to start making the case for euro entry."
The head of policy at the Institute of Directors, Ms Ruth Lea, dismissed the memo as "an outrageous bit of spinning" and said IBB figures would show inward investment was vibrant: "I don't see how Mr Fraser can possibly justify his remarks, which are a gross exaggeration of the role of the European market in the British economy."
The Business for Sterling group, which opposes entry to the euro for the foreseeable future, also criticised the memo. A spokesman, who described the memo as "hysterical", said it had been leaked for political purposes to distort the situation over inward investment.
