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Birmingham and the Euro

Published: November 2001

Topic reports are occasional documents concerning a particular issue, such as the Euro, and its effect on the Birmingham economy. They contain a more in-depth analysis than the regular economic briefings.

The foundation for this report was a survey of over 200 Birmingham manufacturing companies. This was supplemented by information from a variety of sources such as Financial Times Surveys, The Office for National Statistics, The Economist and other local and in-house publications.

Contents

• The Economics of Currency Union
• Currency Union and the European Regions
• Birmingham and the Euro
• BEIC Survey of Birmingham Manufacturers
• European Regional Prospects

Key Findings

• As manufacturing is more involved in exporting and cross-border investment than services, it will be the sector most affected by the more competitive Euro zone environment. Therefore Birmingham and the West Midlands Region, which have a very high proportion of manufacturing employment, will have to face this challenge to a greater extent than other UK regions.
• A BEIC survey shows that a large proportion of local manufacturing companies (46%) thought that joining the Euro would be good for business compared to only 16.8% who thought it would harm their business.
• Over half the companies (52.9%) thought that the economy would be more stable if Britain was in the Euro with exporting companies more positive than non-exporting companies. Amongst companies which export, larger companies tend to be disproportionately positive about joining the Euro.

• Local managers in almost 1 in 4 foreign owned companies reported that they would lose investment if Britain were to stay out of the Single Currency.
• Birmingham's economic growth rate in the 1996 to 2002 period is ranked 22nd out of thirty-nine major European cities, with an annual growth rate of 2.5%. This is very close to the 2.4% growth rate which is forecast for the whole of the European Union.
• A comparison of economic growth in Birmingham with that in other highly urbanised "mini" regions and cities within Britain, shows that Birmingham is holding its ground very well compared to most UK urban centres.