THE pound and the dollar continued to fall against the euro yesterday but small firms will suffer if the euro continues to grow in strength.

EUROPEAN Central Bank governing council member Vitor Constancio said surging oil prices may lead to a period of stagflation, when inflation accelerates and economic growth stagnates.

US PRESIDENT George W Bush’s administration is untroubled by the dollar’s decline, which may help boost sales and manufacturing jobs in an election year without an acceleration of inflation or higher interest rates.