BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Wednesday, 12 December, 2001, 10:04 GMT
The euro hits home in the UK
by BBC News Online's Emma Clark

Three years ago UK companies were complaining about the combined strain of preparing for both the euro and the year 2000.

New Year celebrations were a no-no for beleaguered IT staff, as they first prepared for the introduction of the euro in January 1999 and then Y2K a year later.

Now all those hours of overtime may have paid off.

Many of the systems adjustments in 1999 appear to have put UK companies in a strong position for the launch of euro cash in January.

"A number of companies were most exposed to the euro in January 1999," says Ian Fletcher, head of policy at the British Chambers of Commerce (BCC).

"Larger multinationals co-ordinated preparations across their European arms - and UK arms were pulled along with that."

"Now it's the turn of the smaller businesses."

Been there, done that

In an illustration of this, the British steel maker Corus says it is ready for the euro - and has been since 1999.

The preparations were all done in one fell swoop ahead of Y2K

Michael Hitchcock
"[The preparations were] all done in one fell swoop ahead of Y2K," says the company's Michael Hitchcock.

Corus buys iron ore and coal around the world to manufacture steel, and has been transacting in the euro - through electronic payment systems - since 1999.

But for retailers, exporters and businesses that cater to tourists, the arrival of euro cash is both an organisational challenge and a strategic opportunity.

A new market

In a daring move, retailer Marks & Spencer has decided to accept euros in all of its stores, with dedicated cash tills in about 30 of them.

M&S shopping bag outside a store
M&S opens its doors and its tills to the euro
"The euro opens up a market of 300 million people in Continental Europe," says Paul Smith, euro programme manager at the company.

"This is a potential new business on our door step."

The roots of the retailer's strategy lie in its decision to upgrade over 11,000 tills two years ago.

"We took the view in 1998 that when replacing our tills ahead of Y2K, it was relatively easy to incorporate euro capabilities," adds Mr Smith.

Cardboard cut-outs

The company's latest challenge has been staff training, particularly in the area of guarding against counterfeits.

Eric Leenders, NatWest
Eric Leenders: Offering food for thought
Because the Bank of England has not been responsible for distributing euro notes - unlike "in" countries - M&S has had to work with cardboard look-alikes.

"It is terribly difficult to bring a sense of reality to cardboard specimens," explains Mr Smith, adding that there will need to be further staff training after the launch.

The high-street chemist Boots has also embarked on training programmes and upgrading of its tills to handle the euro.

However, it will only use its euro capability if the UK joins the single currency - the only exceptions being its airport outlets and Irish stores.

Missed opportunities?

Despite M&S's ambitious plans, business leaders are concerned that some companies are failing to recognise the benefits the euro can bring - even to an "out" country like the UK.

"I don't sense that businesses have woken up to those opportunities," says the BCC's Mr Fletcher.

In the small business sector, NatWest Bank has tried to raise awareness of such issues.

Eric Leenders, a consultant at the bank, says there is plenty of food for thought.

For example, he suggests small UK companies:

  • re-consider purchasing and pricing policies, particularly as the euro will make pricing more transparent across the region and could lead to greater competition

  • look at sourcing goods and services from the Continent if the euro introduces more competitive pricing

  • consider paying or receiving payment in euros, but also look at managing exchange rate risk.

Coming to store near you.

In Tenby, Wales, one small company - with turnover of about 1m - is determined to take advantage of the euro.

Like Marks & Spencer, leisure and outdoor store Morris Brothers has decided to let customers pay for goods in euros - and finished adapting its till software this week.

wax jacket
Morris Bros will label jackets with euro price tags
Unlike M&S, it will even label some goods, such as wax jackets, with price euro price tags.

Howard Lewis, owner of Morris Brothers' two outlets and a self-confessed europhile, says the company hopes to cater to the many Irish holidaymakers who visit Pembrokeshire.

The store will also offer foreign exchange services and plans to give customers a generous exchange rate.

"We can make money on the spread - buying and selling euros," says Mr Lewis.

His only frustration is trying to "screw down" buying and selling rates with his bank - funnily enough - NatWest.

"We want them to offer us a rate that is between the [cheaper] commercial rate and the [more expensive] tourist rate," he says.

"But they can't give us an answer."

Taking notice

For all the evangelising on both sides of the euro debate, the reality is that the currency has arrived in Britain's backyard.

And whether it creeps in the back door or is introduced in years to come, UK businesses may be ignoring it at their peril.

Mr Lewis' philosophy is the easier you make it for customers to spend, the more money Morris Brothers will take.

Local butchers, electricians and plumbers might not necessarily be affected, but a surprising amount of UK businesses could be - and in ways they might never have dreamed of.

Marks & Spencer's Paul Smith
"Marks & Spencer decided to accept the euro because it represented a potential market of over 300 million consumers"
The British Chambers of Commerce's Ian Fletcher
"The main consequence will be on their pricing strategies"
See also:

11 Dec 01 | Business
Euros: Where can you spend them?
23 Nov 01 | UK Politics
Blair's new euro hint
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories