Hewitt warns firms on euro dependence

Patricia Hewitt, Secretary of State for Trade and Industry, yesterday warned manufacturers not to rely on British entry into the single currency to close the productivity gap with their overseas rivals.

In a positive assessment of the impact of euro membership, Ms Hewitt said it would offer benefits to hard-pressed manufacturers in terms of trade, transparency, costs and currency stability.

But she also told the Government's Manufacturing Summit in Birmingham that industry should not rely on euro entry as the answer to all its troubles. "We must avoid thinking that a different exchange rate would solve all the problems our manufacturing companies face. In fact, in the 1960s and 1970s when sterling was falling, our productivity gap with France and Germany actually widened," she added.

Ms Hewitt also announced an extra £20m of government support for an initiative by the CBI and TUC to boost productivity. The money will be used to expand the partnership fund, which helps firms learn best practice, and set up industry forums in more sectors of manufacturing. The extra funding takes the amount of government money spent on productivity initiatives to £45m. "As a government, driving up productivity is our number one priority," Ms Hewitt said.

In addition to the new funding, four more regional centres of manufacturing excellence are being set up in the East Midlands, the South-west, Yorkshire and Humberside and the North-east.