In our April issue, we published a short questionnaire asking readers about their experiences of and views on the single European currency, even though, at that stage, the euro was not even 100 days old. It came as little surprise to us to discover that many businesses’ retail customers were confused by euro pricing and were not exactly falling over themselves to use cards to pay in euros rather than francs, pesetas or marks. Equally, we were not surprised to find that, already, almost a quarter of businesses have UK-based customers who want to pay in euros. We have been stressing for more than a year that the euro is coming into Britain even if Britain never goes into the euro. What did surprise us was that, even though FDs regarded British membership of EMU as a good (or at worst, benign) development for both their company and for UK industry as a whole, more than half said that they would personally vote against it in any future referendum. So why would some FDs exercise their democratic right in a way that – in their own words – might harm their business or the economy? The simplistic answer may be that FDs are a conservative lot, raised on sterling and reluctant to bid farewell to the coin of the realm. The more probable answer is that, even though there are benefits to be derived from British entry into EMU, there are also significant risks: Britain may join at too high a level; our interest rate sensitivity may do disproportionate damage to our economy in any future effort to stifle continental inflation; and nobody knows what pressures will be created within Euroland by such disparate economies as Germany and Italy. These risks are real, and FDs may regard the possible downside of EMU as more than offsetting the probable upside. But it is industry’s responsibility – and in particular, FDs’ responsibility – to be alert to the risks that the euro presents and to be prepared for them. Joining either a pro-euro or pro-sterling bandwagon is not enough – and is probably completely pointless.
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