UK industry is better off without the euro

The success of the hotel and restaurant sector depends on there being a stable business environment, a steadily growing economy, and growing prosperity with greater disposable consumer income.

In the past, the hospitality business has suffered from boom-bust cycles, in which costs increase during a period of high inflation but a general downturn in the economy undermines demand for our services.

Financial news has been dominated recently by the strength of sterling and the effect that this is having on some sectors of the UK economy. But in reality, the pound has been stable against other world currencies. The real problem is that the euro has been weak, and has fallen in value by 20% since its launch.

There is growing concern that the persistent weakness and volatility of the euro will lead to inflation and an unstable business environment in the eurozone. In Ireland, inflation is already running at 5% and property inflation was 40% last year.

And Ireland is not alone. A recent International Monetary Fund report revealed that the economies of five of the 11 countries in the eurozone were overheating.

In contrast, Britain currently has a stable business environment. We have the lowest inflation on record, the lowest unemployment for 20 years and the lowest interest rates for 30 years.

If we had joined the euro from the start, we too would now be experiencing high inflation, which would have driven up costs for the catering industry and endangered the stability of our business environment.

It is often claimed that interest rates would be lower if we joined the euro, but the Government does not need to join the euro to cut interest rates and have a looser monetary policy. If the chancellor wants to swap lower interest rates for higher inflation, he need only change the target he sets the Bank of England. If we joined the euro, he would no longer set monetary policy and we would lose economic control.

Our last currency experiment - the Exchange Rate Mechanism - led to the collapse of 100,000 businesses, doubled unemployment and forced 1.75 million home owners into negative equity. There are lessons to be learned from the ERM fiasco. Our economic policy should be set by our own Government and our own central bank with the needs of the British economy in mind. There are serious dangers in losing control of our economy.

But the euro does not just mean an unstable business environment. Last year, the prime minister launched the Government's National Changeover Plan, telling business to "prepare intensively" for the possibility of joining the euro early in the next parliament.

An independent report by accountants Chantrey Vellacott DFK has revealed that the costs of euro entry would be a staggering £36b. This includes the cost of changing coin-handling machines, changes to accountancy and IT software and the costs of training staff to use the new currency.

For hotels and restaurants, the euro means extra costs with no benefits. We would still have to bear the cost of converting to the new currency, but the removal of short-term currency fluctuations would be of little benefit to us.

Another factor that strongly influences the success of hotel businesses is labour costs. Our non-wage labour costs are much lower than in the eurozone.

In Britain, employers' national insurance contributions are half the eurozone average and we have lower taxes and a more flexible labour market.

In the eurozone, the labour market is heavily regulated. It is expensive and difficult to employ staff during busy periods and even more difficult to shed staff when business slows down.

Eurozone politicians describe our efficiency as "unfair competition" and it is becoming increasingly clear that the euro is the spur that would drive forward the harmonisation of taxes and regulation.

The latest poll reveals that 73% of UK businesses want to keep the pound. They understand that the euro would lead to a loss of economic control and that the costs would outweigh the benefits.

We must ensure that the Government does not ignore the views of this business majority.

Sir Rocco Forte is chairman and chief executive of RF Hotels and a member of the National Council of Business for Sterling