2 January 2002
Isolation fears as Euro rolls in
By Alistair Driver
BRITISH farmers could find themselves increasingly isolated now the Euro has finally become legal tender, economists have warned.
The introduction of the single currency across 12 European countries could hurt British farmers, according to the National Farmers Union.
Policy director Martin Howarth believes the European Union food chain will become increasingly integrated.
Many supermarkets and food processors are likely to prefer the security of the Euro over Sterling, he said.
UK farmers will also lose out on the benefits of being able to compare input prices from Dublin to Dresden, added Mr Howarth.
“There is a danger that the EU food chain will build up within the Euro zone and we will find ourselves outside looking in,” he said.
“We will not have that advantage of price transparency.”
The scrapping of the agrimoney system that compensated farmers for currency changes has left British farmers at the mercy of the strong Pound.
Francis Mordaunt, head of business research at Andersons farm business consultants, said a weaker Pound would benefit UK farmers.
But he warned that British farmers could find it harder to trade in the long-run if the UK stays out of the Euro.
“The UK will be disadvantaged by not being fully a part of Europe. There are likely to be barriers to trade as long as we are outside.”
Sean Rickard, lecturer at the Cranfield School of Management, said the decision not to tie sterling to the Euro had “crucified” the industry.
“The arrival of the Euro, if everything goes according to plan, might just see a change in public attitude and a change of policy from Tony Blair.
“It would be very good news if we join,” he added.
David Turner, director of agriculture at PricewaterhouseCoopers, believes it is likely to be 2007 at the earliest before the UK joins the Euro.
Mr Turner said he felt the Prime Minister would wait until after the next election to call a referendum on whether to join the single currency.
“In the meantime, UK farming could fall off the edge of the cliff if the Pound gets stronger,” he said.