Comment - Arguments for EMU preparation are compelling

With both Labour and the Conservatives adamantly adhering to the “wait and see” line on European Monetary Union, the temptation is strong for British businesses to postpone their own preparations for a single currency until after a firm decision has been made.

After all, why waste time and resources planning for the implementation of the euro, when the two main political parties remain fixedly undecided about UK participation in a common currency? And even if the incoming government – of whichever hue – does decide to join in, it is becoming increasingly unlikely that Britain would be either ready or willing to join the first wave of EMU in 1999.

Certainly, British companies are not ready for the euro. A recent report by the Hundred Group of Finance Directors, which sets out practical guidelines on preparing for EMU, highlighted the fact that less than 20% of UK firms have a strategy in place for dealing with monetary union. This, despite the very real possibility that a single currency will exist within Europe in two years’ time.

As detailed in the article “Is your company EMU-friendly?” (page 41), the arguments for beginning preparations now are compelling. Almost every company in this country will be affected by the advent of the euro, even if the UK stays outside EMU. Even those businesses which do not have operations in other EU member states will have to contend with the common currency in areas ranging from sourcing raw materials to pricing goods for export, from dealing with customer invoices to running treasury operations.

Companies which don’t act now will face a hard slog further down the track readying their accounting, banking, legal, commerce and treasury functions in time for the single currency. And along the way they run the risk of losing out to more far-sighted competitors.

For the likes of Tony Blair and John Major it might be politically prudent to dither on the single currency decision but such a “wait and see” approach is a dangerous option for UK plc.