MPs on the House of Commons trade and industry committee have said that the government and commerce are vastly underestimating the true costs of joining the euro.

Warning that the transition could cost government and business billions of pounds, a report from the committee said the government was choosing to ignore the real costs of signing up to the single currency. The report says that government has been "unwilling" to make any realistic assessments of the costs involved.

The report says: "The potential costs to business of joining the euro are high, to be measured in billions not millions. There is a danger that the government and business are underestimating the work and expense. The government is unwilling even to discuss the costs to business of UK membership of the euro, let alone to estimate them."

The result of the government's failure to tackle the issue is resulting in business complacency, MPs claim. "There may be good political reasons for this: but we fear that this policy is deterring companies from preparing estimates for a changeover and may eventually increase these costs. Unless and until the government takes steps to identify the nature and scale of the possible costs, including in particular the implications for IT (information technology) expenditure, its awareness campaigns will prove ineffective," the report says.

The report comes amid renewed controversy about the single currency within government. Peter Mandelson on Wednesday re-ignited the debate over the single currency when he said that it was a "tactical error" to believe that the public would be persuaded to join the euro based upon economic arguments alone. Speaking on Thursday, the prime minister's official spokesman said that the government had never denied that joining the single currency had political and constitutional implications.