Hundred Group outlines euro consequences

All UK companies of any reasonable size are going to have to take steps to prepare for the single European currency, whether the UK joins or not.

This stark warning comes from the Hundred Group of Finance Directors which has just produced a practical guide and project checklist.

‘Finance directors are going to be implementing the single currency,’ said Edward Weiss, chairman of the single currency working party, ‘and therefore we have a vested interest in understanding the practicalities.

The report warns that greater price transparency will allow customers and regulators to exercise greater scrutiny over prices. An increase in competitive pressures seems certain to result throughout the supply chain.

Wages will be similarly affected.

The change in currencies may affect derivatives, financial instruments or long-term supply contracts. It is not yet clear how force majeure clauses will apply, particularly in contracts governed by, for example, New York State law.

Weiss warned that companies within the euro zone may be more inclined to trade with each other rather than with those outside because of the stable transaction costs and price transparency the new currency will bring.

But, he added, the new euro capital markets will create ‘a large pool of liquidity and, hopefully, low-interest liquidity’ for companies to tap, whether the UK is in or out.

Copies of the report are available from: KPMG, reference 5631, Distribution Centre, PO Box 433, Watford WD2 5QP. Tel: 01923 214807. Price #25

See Leader, page 9.