I'll expand outside UK if we stay out, says cleaner king  Factory in Malaysia is standing by

Vacuum cleaner king James Dyson, the high-profile inventor and businessman, is set to reignite the debate surrounding the euro after threatening to expand his operations in Malaysia, rather than at his British factory, if the UK does not join the single currency.

Dyson, who devised the bagless vacuum cleaner, sparked a national debate earlier this year after complaining that the strong pound could force his company to move overseas. This time, however, his comments carry extra weight. Since he made his now famous remarks, Dyson has opened a small factory in Malaysia in a bid to offset both the impact of the pound and planning problems over enlarging his UK factory in Wiltshire.

The Malaysian plant is now used to make products for the Far Eastern markets, chiefly Japan. But Dyson is considering increasing its capacity in the longer term if the UK government's attitude to the single currency doesn't change.

'It's suicidal for the UK not to join the euro. Why should we go on exporting at a loss? We're facing unfair competition,' he said.

Asked about the prospect of developing future operations abroad, Dyson, who last week unveiled a new type of washing machine as his latest invention, said: 'We have a small factory in Malaysia which is responsible for between 5 and 10 per cent of our output. Developing that could be a possibility in the future, but we could look to make our products anywhere.'

News that Dyson is considering expanding overseas underlines the problems facing UK manufacturers. 'While importers are having a whale of a time, it's horrendous for exporters,' he said.

Any move to develop the company's production capabilities overseas would be a bitter pill for the 53-year-old, who employs around 2,000 people at his factory in Malmesbury. The company intends to employ around 3,000 staff there by the end of next year as it rolls out its washing machine, and Dyson is committed to keeping this site central to his business plans.

'We want to manufacture where our engineers are,' he said. 'We don't want to have to have satellite factories. It's very important to have everyone on the same site.'

However, he pointed out that recently big name manufacturers such as Nissan, Panasonic and Sony had all scaled back production plans for the UK. It made sense for UK manufacturers to examine all possibilities, he said.

Dyson stressed that a decision to move more of the company's future production capability abroad would not be taken quickly. 'We're in it for the long term. Whatever happens we will still have a great commitment to the UK.'

Dyson's comments come at a time when the value of the euro continues to slide. On Friday the European Central Bank intervened on foreign exchange markets to prop up the ailing currency.

It was the second such move this year. Six weeks ago, the ECB, along with the US Federal Reserve, the Bank of England and the Bank of Japan, all joined forces in a co-ordinated bout of intervention to bolster the euro. The ECB has raised interest rates seven times in the past year in a bid to reverse a 30 per cent drop in its worth against the dollar.