The Federation claimed that scaremongering tactics and hype were used by Whitehall Mandarins and the IT sector to get small businesses to fork out for euro conversion projects.
But in the run up to "euroday" -- Jan 1 1999 when the first 11 countries joined the Eurozone -- small business were fed "dubious information" and encouraged to invest in euro-complaint technologies regardless of whether their business would be affected by the euro, according to FSB member Brendan Burns.
Burns, who heads up a family-owned forestry company in Scotland, said that he received numerous calls from panic-stricken members who were unsure as to what they should do come Jan 1.
"There are an awful lot of companies with an awful lot of products and hype. We have been given dubious statistics and information and many members called us in a panic. The lack of clarity is the single biggest problem," said Burns.
Although some firms stand to benefit from single currency transactions -- Burns' timber company trades with Continental partners -- Burns believes the majority of small businesses should "sit back and wait", unless a customer or supplier wants to deal in euros. He said: "At the moment there's no evidence that small businesses need to do anything but wait and see how it affects them." While the consensus is that the UK is likely to join the Eurozone eventually, the FSB insists that Labour's campaign to get businesses ready for the single currency was "hyped up".
Peter Smith, another FSB member who runs a UK property and travel business, urged the government to come clean about the implications of the euro and the cost to small enterprises. "Preparing for the euro is like joining an expensive golf club. You pay for membership, then there's the golf clubs, ongoing fees and green maintenance. We are totally opposed to the concept of hidden costs for small businesses," Smith said.
Donald Martin, who heads up the FSB's economic affairs unit, blamed high-street banks in part for the lack of accurate information about EMU. "The Treasury has attempted to inform us and has put up a lot information but much of it is hype. The biggest gambit is that nobody has told us exactly how much we need to spend."
The FSB, which last year voiced concerns about euro hype to the former small firms Minister Barbara Rote, plans the DTI's Michael Wills who is responsible for small enterprises.