In the face of falling profits investment will drop some publishers will disappear and there will be job cuts in

In the face of falling profits, investment will drop, some publishers will disappear and there will be job cuts in the industry.On top of the threat of cheap products flooding in from Asia and particularly Eastern Europe, Bennett claims that the lifting of the sales barriers will allow easier passage for pirate games to come in from places such as Russia and Estonia. “Product is being ripped off, but it looks exactly the same as an original, and how are we going to restrict it?”Already publishers are starting to think about how they could counter any changes by reducing their exposure to non-EU imports. John Pirie, executive vice-president of distribution for Europe at Infogrames, says its policy of offering cheaper pricing to poorer countries outside the EU could change. “If you are working with a partner, then with these changes there is nothing to stop them grey-importing into the UK, and sponsorship and subsidy comes back to kick you in the teeth.”As part of his defence, Pirie calls on the DTI to recognise the costs of developing a game and the need to recoup some of that outlay through the retail price. “Tens of millions are invested in games, and it can cost the same as a film,” he says. “The costs are large and you have got to get some return, but we don’t make as much profits as people think we do.”Richard Barclay, marketing director at UbiSoft, says recent losses among publishers, which included a £96m pre-tax loss at Eidos for its financial year to 31 March, are evidence that the industry is not ripping off consumers.

“Many video games companies have posted horrendous losses and it can take a considerable amount of money to develop a game ­ and then only a few will be successful. It is a very difficult business to be in at the moment,” he says.Despite the games industry’s pleas for protection, there are supporters for the DTI’s plan to introduce changes that should result in cheaper prices for consumers. Phil Evans, senior policy adviser at the Consumers’ Association, dismisses claims from the games industry that opening up the market for more imports will threaten their existence and start a piracy tidal wave.”This is a business problem and it should be down to the efficiency of the publishers, not down to their ability to gouge the UK consumers, who pay more than anyone else. Piracy happens irrespective of what ever trademark exists,” he says.Evans calls on the games industry to provide more evidence of the potential damage that changes in legislation would cause, instead of damning the proposals out of hand. “Computer games have always been an area of concern because they do set different prices and because some of the games are engineered not to work outside the US or Europe,” he says.Evans adds that using a country such as Turkey as an example of where lower price points could be used to undermine UK brands is questionable in an EU that includes Greece and Portugal, where lower game prices could also be justified.He warns that the supporters of trademark change recognise that it will take a long time to get the initiative made law and are digging in for a prolonged contest. “We are in it for the long haul.”Simon Chapman, partner at Lochners Technology Solicitors, says the process of getting the changes made into binding laws faces several hurdles. “The alternative to a precedent being set by the European Court of Justice would be for the European Parliament to amend the Trade Mark Directive, which would in turn require domestic legislation adopting the amendments,” he says.In the meantime, the British games industry faces further uncertainty.

The next step for the DTI will have to be speaking to the games industry if it plans to give the sector a fair chance to defend its position. “Rather than being flanked by retailers, come and talk to the manufacturers. Come and talk to me before you make a decision on my behalf,” Pirie demands.. The markets are clearing away the biggest obstacle to British adoption of the euro: the high exchange rate of sterling. Many economists have long thought that the pound would retreat to a sustainable level when the markets saw that the Government was serious about joining.

We were right.The pound is falling merely on an increased probability of entry in the wake of the general election. However, the big debate between the chancellor and the Prime Minister is unresolved. Within the Treasury, some influential voices argue that Britain does not lose by delaying. Surely it makes sense, they say, to see how the system survives in bad times as well as good before deciding to go in, especially since we have a carefully negotiated opt-out This is always a tempting argument. It combines the Whitehall doctrine of unripe time with the natural instinct of the cautious politician to delay any decision that will alienate someone However, it is surely wrong. There are real economic and political costs in delay.
First, British consumers will continue to miss out on the benefits of lower Continental prices. The euro completes the single market for the 12 countries and 301 million people in the euro-area.

Businesses are aligning their prices, generally at the levels of the lower priced markets. They know that, if they do not, wholesalers will set up supply lines from cheaper sources in the euro-area This is a powerful force. The internet is no substitute, because the uncertainty of foreign exchange movements stops businesses from exploiting those price opportunities fully. One recent study showed that a Canadian province trades 20 times as much with another Canadian province as with an equidistant US state despite free trade and a common language. Currencies are an obstacle to trade.Secondly, British businesses are losing market opportunities. That price alignment within the euro-area is forcing efficiency improvements to protect profits.