Teeside MP Ashok Kumar has argued why the North-East economy needs Britain to join the euro as quickly as possible.

In reply, Peter Troy, chairman of the Darlington branch of the Federaton of Small Businesses explains why we should keep the pound.

"THE Cabinet is this week deciding whether it should ask the British people to take an enormous gamble and back the euro or keep the familiar pound sterling.

The Federation of Small Businesses, with about 180,000 members, has constantly opposed the dumping of the pound because it would mean an unacceptable loss of control of the UK economy and will not bring advantages to British business.

This position is based upon simple facts.

This is not just a question about change of currency; it is a question of economic and monetary union. If we were to join such a union, we would be locked in permanently to one interest rate that is set for all eurozone countries by the European Central Bank, in Frankfurt, Germany.

This "one size fits all" is viewed as risky and could well lead to job losses and deeper recession in the North-East - the correct interest rate for all the UK has frequently been the wrong one for the North-East. And where will we go to complain when it is wrong? Frankfurt is further away than London.

Small businesses play a vital role in the economy, employing 50 per cent of the private sector workforce and supplying 50 per cent of the country's Gross Domestic Product. More than half a million people will start up their own business this year.

One reason for the opposition to the single currency is that small businesses stand to gain very little. Having the right economic conditions is vital for the success and growth of business which is essential for prosperity.

Eighty per cent of small firms trade within a 50-mile radius of their base and so to them the oft-quoted advantage of the euro - non-fluctuating exchange rates - makes no difference.

The British economy has been growing steadily for more than a decade, it is the fourth largest in the world. Small businesses have been able to make an increasing contribution to the country's well-being - in fact, the small business sector is the engine room of the economy. As the old saying goes: "If it's not broken why try to fix it?'.

High unemployment rates and low growth rates across the EU do not make an attractive case for the euro. The economic problems in Ireland, Portugal and Germany and the inability of those respective governments to deal with their national problems because of their membership of the common currency is an illustration of how the levers of fiscal government pass unquestionably from national to EU institutions.

There have been some well-publicised statements from big business calling on the Government to give a clear Yes to the euro. These companies, such as Nissan at Sunderland, talk of dire consequences for job prospects as they are forced to re-locate to the eurozone.

Such statements play on people's natural fear of unemployment. The big employers may wish to consider that many of their factories were established with grants from the British taxpayer in the full knowledge that, on balance, this country is unlikely to agree to join the euro.

In any event, the costs of employment here in the North-East are still lower than the EU average and the reliability of North-East workers is well-known to be far superior than that of their European counter-parts. This is why, of course, Sunderland Nissan is the most efficient car plant in Europe. Using the fear of job losses if we say No to the euro is predictable and overlooks other arguments against.

Britain differs from the economies of the EU in key respects. One of these is the spread and diversity of our overseas trade. Unlike countries forming the single currency zone, more than half of our trade is with countries outside the EU - only 47 per cent is with the eurozone countries.

Only 15 per cent of UK output is actually sold to the EU. The other 85 per cent is either sold elsewhere in the world or not exported at all.

Economically, Britain would gain little from saying Yes to the euro.

Even if the rest of the Cabinet agrees with Gordon Brown that now is not the time to join the euro, it seems likely that the British people will one day have to make a choice.

That choice, or perhaps gamble, must be based on facts and not propaganda."