Joining euro could hike UK prices 4%

THE cost of everyday life from a drink to a haircut could rise by up to 4% if Britain joins the euro. Research shows that the price of such basic purchases has escalated in many eurozone nations.

Experts say the increases are often driven by retailers exploiting confusion over the new currency, and fear sectors which have pushed up prices across Europe could do the same here. That would mean shoppers in Britain paying 65p for a white sliced loaf compared with 58p at present. An average London carpark charge could rise from £8 an hour to more than £9.30.

The findings were made by a European consumer group which studied price rises in the 12 countries which switched to the euro in January. The Bureau European des Union Consommateurs found that all have experienced some increase in the price of basic consumer goods and services. In 10 of the 12 countries, the increase has been 'dramatic'.

A BEUC spokeswoman said: 'Prices in bakeries, cafes, bars and hairdressers went up particularly high. If one company put their prices up, it seems others follow. There seems to be no reason for these changes. It depends on how unscrupulous people are.'

Taking the BEUC figures, the the london Evening Standard has calculated the overall price increase in each retail sector. It shows how costs could change if retailers here followed the patterns of other European companies and reveals an average rise of 3.8%.

Independent bakeries have increased their prices by an average of 11.75%. Carparks have also raised their prices in five EU countries by an average of 16.2%. Hairdressers have raised their prices in five countries by an average of 5.42%. In Italy, 70% of hairdressers increased their prices by an average of 2.8%. In Germany, hairdressers raised prices by 17% for children and up to 3.91% for men. Interestingly, a woman's haircut dropped by up to 6.52%.

A new survey from Eurobarometer adds to the concern with 74% of people living in the eurozone claiming prices have gone up since the changeover. The figure is an increase from January, when 68% of people said they had noticed price rises.

A spokesman for the Consumers' Association said the BEUC research should provide vital guidance for the Government if it decides to join the euro. 'The Government needs to keep an eye on euro prices and whether they go up so lessons can be learned. There are concerns from European consumer groups with regard to particular service sectors and we need to watch what is going on. While there is dual circulation of the euro and the country's own currency, consumers should be able to compare prices easily.'

Research shows that prices for more than 10,000 products across Europe have increased since January. Many of these rises are small - between 1% and 2% - and are thought to be the result of rounding up old currencies to the nearest euro. But many Europeans believe increases are down to the greed of retailers. A recent poll of Germans found half wanted the Deutschmark back, furious that prices for some goods have almost doubled.