Peter Hain has boosted the government's pro-euro message by warning that the UK faces losing foreign investment in manufacturing because it is outside the euro-zone.

As Europe gears up for the introduction of the single currency' notes and coins on January 1, the minister for Europe told the BBC that France was attracting a greater share of foreign direct investment in manufacturing. "In respect of foreign direct investment there is now evidence that Japanese investors, American investors and others are choosing to locate in the eurozone because they do not have the exchange rate instability which we are experiencing from being outside it," he said.

The minister also urged British shops to accept the new currency.