Just another tequila sunrise for Anita Roddick

Sterling weakness; Decommissioned

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Pound falls further as manufacturing hits 10-year low

Mexicans serenade Roddick with £350m Body Shop bid

CEO swept out in coup at British Energy

Hamish McRae: Turbulence ahead for sterling in run-up to euro referendum

Is the "green dream" that has been the Body Shop finally drawing to a close? Anita Roddick's creation has come a long way on the back of products like peppermint foot lotion and ginger anti-dandruff shampoo, but in recent years it seems to has got bogged down in its own goo and it's hard to know exactly where it is all meant to be going. So if Anita and her husband Gordon really are preparing to sell out, it would seem an appropriate time.

There have been rumours like this before, of course, and the talks disclosed yesterday are at an early stage. But these are the first takeover talks which Body Shop has not completely rubbished at the outset and a £350m deal with Omnilife of Mexico looks more than possible. Look out for Tequila lipgloss and Guacamole face packs at a Body Shop near you soon.

Ms Roddick is now 58 and has taken a back seat at the business for a couple of years now. Sales and profits have been falling and the issue, perhaps, has not been whether to sell out, but to whom. With its environmentally friendly, socially responsible ethos, Body Shop was always going to be choosy when it came to finding a home. It apparently "did Anita's head in" when Ben & Jerry's, the charity-friendly American ice-cream maker sold out to Unilever last year.

Prêt à Manger's deal with McDonald's a couple of months ago must have looked like a dance with the devil too. With almost 50 per cent of Body Shop equity controlled by the Roddick's and their initial backer, the garage owner Ian McGlinn, the company can afford the luxury of picking its new owner. By all accounts the privately owned Omnilife shares many of the same philosophies as Body Shop.

Body Shop's problems have been well documented. They include an overly complicated business with 1,800 stores in 49 countries, and some highly unorthodox management practices. Potential franchisees were more likely to be asked about their favourite books and how they want to die than how good they are at business. It is also questionable whether a business with Body Shop's credentials should ever have gone public in the first place. Ms Roddick's relationship with the red in tooth and claw types that populate the City has always been one of mutual disgust.

The mooted price is a good one by recent standards, Omnilife ought to breath new ideas and energy into a format that has become more than a little tired, and as for Ms Roddick, a deal with the Mexicans would provide a suitably exotic exit.

Sterling weakness

In markets, all things are relative, and those repeated references to the iniquities of the "strong pound" always did depend on which currency you were comparing it with. Against the world's chief reserve currency, the US dollar, the pound has for some years now been a relatively weak currency. The pound cannot be described as "strong" when measured against a representative basket of international currencies either. On a 10-year view, the sterling index has risen only slightly and on a 15-year view, the pound is actually a good deal lower. It is only against the sickly euro that the pound has made real progress in recent years, but then again there are few currencies of any credibility that haven't.

Unfortunately for British manufacturing industry, it is the euro that matters since it is Europe that accounts for the bulk of our trade. Even so, Britain has been living with a weak euro for the best part of two years now, and very little harm does it seem to have done in the round to British jobs and economic performance more generally. The steep fall in industrial production reported yesterday had nothing to do with the strength of the pound and everything to do with the fact that our foreign owned mobile phone manufacturers are being hammered in the market place by Nokia and others. That, and the US slowdown.

For the past two days, the pound has been falling against both the dollar and the euro after a report in this newspaper that Tony Blair plans to start campaigning actively for euro membership soon into the new parliament. This is a rational enough reaction. Once in the single currency, the pound will become diluted by the euro's relative weakness, so the two currencies should logically move towards each other to meet somewhere in the middle before that event occurs.

It is the market that will decide the appropriate rate for entry, not the politicians or industry, and the market seems pretty much determined on making that entry point round about 3 German marks, or 64p per euro. Just to put that in context, the equivalent dollar rate is about $1.33, not a happy prospect for those that travel regularly to the US.

Theoretically, such a downward revision in the exchange rate would also warrant higher interest rates, for it is the pound's relative strength against the euro that has been helping to keep inflation in check. The trouble is that euro membership would actually require lower interest rates, since the ECB still has a base rate which is 75 basis points lower than the British equivalent.

The combined effect of both a lower exchange rate and lower interest rates would be to push inflation quite considerably above both the British and European inflation targets. All of which tells you that the British economy is not yet sufficiently converged with Europe to allow immediate euro entry. There is another reason too why it may be premature for the markets to assume early membership of the single currency.

The dollar is only strong because the euro lacks credibility and because no one in their right mind would put their money in yen based assets right now. A burgeoning trade deficit and rapidly slowing economy are not the usual ingredients of a strong currency, but the lack of credible alternatives continues to make the dollar the international currency of choice.

It would frankly be risible for Britain to enter the euro while the single currency remains so unloved and inconceivable that any government would want to join as long as the European Central Bank remains such an opaque and unaccountable institution. Europe has an awfully long way to go on structural reform, but the euro's travails are as much the fault of the ECB's ineptitude as the fundamentals of the eurozone economy. Mr Blair's campaign for the euro will have to be accompanied by an equally vigorous campaign for reform.

Decommissioned

The nuclear generator British Energy has a brutal way of dealing with chief executives deemed to have reached the end of their productive lives. Yesterday Peter Hollins was decommissioned in the same abrupt way as his predecessor Bob Hawley.

Mr Hollins thought he had survived the meltdown in British Energy's share price which followed last year's dividend cut and its ill-fated foray into the electricity supply business. Unfortunately for him it has proved to be a temporary reprieve.

Robin Jeffrey, just back from establishing British Energy as a force in the North American market and now installed as chairman, has dropped him like a broken fuel rod. The back-end liability is a £300,000 severance cheque and a hiatus while a new chief executive is found, but in the nuclear industry that is just a drop in the lagoon.

j.warner@independent.co.uk