British manufacturers look set to spearhead the introduction of the European single currency into Britain – whether they like it or not.
Bernd Euler, finance director of Siemens, warns that firms that do not accept payments in euros would lose out in the long run, as they would be a currency risk for the buyer. Nevertheless, Siemens, which last week announced 1997 sales of £2bn from its UK subsidiaries, said it would not force any of its 12,000 suppliers to quote in euros.
Many business leaders believe Britain’s big manufacturers will trade in euros at the request of mainland European customers, once the currency is introduced in January 1999.
To avoid currency risk, these UK companies in turn look set to ask their own suppliers to accept euros too.
One source at a supplier to Siemens said his company would have no problem taking payment in euros – and would automatically seek to encourage its own suppliers to quote in euros.
Some business leaders doubt that smaller suppliers will be able to comply, as they would be left holding euros that they would then need to change, effectively having to shoulder the currency risk and transaction charges passed on by the larger firm.
‘Smaller companies – many of whom have no experience of exporting – will have to start treating customers in the UK who are operating within the euro area as export markets,’ said Dr Ian Peters, deputy director general of British Chambers of Commerce.
‘It is now becoming almost irrelevant to debate whether business wishes to join the euro area or not. The question now is how to deal with the practical consequences.’
* Siemens will this spring start its delayed series of seminars for UK suppliers on the implications of doing business in the euro.
Bernd Euler, page 10