To constrain the rising pound sterling, the British government should consider the possibility of an early entry to the planned single European currency, unions and employers said. As a way of curbing sterling's rise, currently at an export-dampening eight-year high, the head of Britain's main employers' organisation suggested that the government bring down the value of the British currency by linking it to the euro.

Mr Adair Turner, head of the Confederation of British Industry (CBI), called for the Chancellor of the Exchequer Mr Gordon Brown to raise the question of sterling's entry to the currency system.

"If one was focusing entirely on the tactics of bringing sterling down, one might talk about early entry," he said. "That might play a role in helping to talk down the pound," he continued, adding that this was because: "We are very cautious about entering at the very start."

The CBI called earlier this week for Britain to enter the single currency but not in the first wave in 1999.

From the trade unions, Mr John Edmonds, head of the GMB union, agreed: "With the euro or with the potential euro looking pretty weak, any link we can make with that will get the pound down a bit."

Stock market analysts have meanwhile predicted a rise in interest rates amid concern about rising inflation.