Wages would be targeted, the group warns

The Labour Against the Euro group said wages and working conditions would worsen for manufacturing workers if the UK entered the single currency.

Mass unemployment is not a price worth paying for dogma Ian Davidson Labour Against the Euro

In a new pamphlet endorsed by the TGWU, the group says eurozone politicians are hamstrung by the strict rules governing the currency.

As a result, "wage flexibility" is the only course open to them in attempts to boost competitiveness, they say in The Manufacturing Case Against the Euro.

The pamphlet says previous attempts to manage fixed exchange rates, such as the ERM in the 1990s, had led to job losses, wage cuts and bankruptcies.

It says "wage flexibility" in the eurozone is "code for the breakdown of national wage bargaining and a hire-and-fire, low-wage culture across continental Europe.

"British manufacturing employers may be tempted to support the euro on these grounds, but they will find that the co-operative relationship built up with their employees will disintegrate.

"British manufacturing workers face a threat to their wages and working conditions far greater than that endured under Thatcher's deregulation.

"Why should they be made to suffer a second assault for the sake of a badly-designed single currency system?

'Wishful thinking'

"It is because the euro is being used as a catalyst for deregulation of European labour markets and a tool to bear down on wages that the trade union movement in Britain - and the eurozone - is turning against the single currency."

The document says those arguing for euro entry to make manufacturing more competitive are seeking devaluation.

But it is "wishful thinking" to suggest that other eurozone countries would allow the UK to join the currency at a rate which may give British firms an advantage.

Rules governing tax and spending, alongside the European Central Bank's inflation target of 0%-2% would force the UK to cut �20bn-worth of spending.

"The eurozone's design faults are intractable and long-term," said the leaflet. "Boom and bust will be the inevitable result."

Catalyst

TGWU assistant general secretary Barry Camfield - a candidate to lead the union when Bill Morris retires this summer - welcomed the pamphlet in a foreword.

"The reality, as this paper shows, is that the euro has been a catalyst for an onslaught on the rights that workers enjoy in the rest of Europe," he said.

"At a time when the UK is outperforming the eurozone, with roughly half its unemployment rate, faster growth and increasing investment, the argument is that it would damage our manufacturing industries even more to join a monetary union which is clearly stumbling and failing ordinary working people."

Labour backbencher Ian Davidson, chairman of Labour Against The Euro, added: "We must not allow British manufacturing to be crucified by the adoption of an uncompetitive and non-adjustable exchange rate simply to advance the political objectives of an elite.

"Mass unemployment is not a price worth paying for dogma."

But fellow Labour MP Chris Bryant, chair of the party's Labour Movement for Europe, said the suggestion that wages would fall if the UK joined the euro was "lurid and ridiculous" and would "ring hollow on the shop floors of Britain factories".

'Bunkum'

He said a major UK manufacturer, Corus, was threatening to cut jobs because of the problems of currency volatility.

"The facts are clear. German workers earn more, have longer holidays, better public services and are more productive," he said.

"The idea that our manufacturers are doing well while Europe suffers is also bunkum.

"German and British manufacturing output are both shrinking at the same rate - while that in Italy and Spain is growing and the euro-zone as a whole is doing much better than us.

"The anti-Europeans should apologise for putting out such rubbish."