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Saturday, 15 December, 2001, 14:38 GMT
BBC correspondents on euro launch
Bridget Kendall and economics reporter Dharshini David were joined by Phillipa Thomas in France, Chris Morris at the Laeken EU summit and Rebecca Jones in Berlin for a live forum.

To watch coverage of the forum, select the link below:

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The arrival of the euro as a cash currency is imminent, with the first sample coins due to be handed out to the public at the end of this week.

And on January 1st or E-day, the euro becomes legal tender. Within two months, consumers and businesses will no longer be able to use the 12 national currencies it is replacing.

It is the largest currency changeover ever attempted. The introduction of the euro will require the exchange of 15 billion notes - enough to stretch to the moon five times - and 50 billion coins.

What do you think of the euro? Will it work? Are you ready for the euro?


The topics discussed in this forum were:

  • Euro Summit
  • Why is Britain opposed to the euro?
  • Is the UK out of touch?
  • National identity
  • Midnight 2002 - what happens?
  • Alternative policies
  • Pensions and the euro
  • Pros and cons for manufacturing?
  • Price transparency
  • Coin collection
  • Triumph of politics over economics?
  • Mixing the coins?

    Euro Summit

    Bridget Kendall: Chris Morris who's in Belgium at the EU summit in Lakaen. Chris what's the feeling at the summit there today - is the euro much of a subject at the summit?

    Chris Morris in Belgium:
    It is behind the scenes certainly and I think there's a feeling here that this is real - really a landmark in European integration. If you look at the history of the past 50 years, since the Second World War, this is seen by many European officials here as one of the key moments. You can have European institutions for this, that and the other but when people have notes and coins in their pocket that they can actually feel and see then everyone knows that things have changed. So even though it's not a big subject of political debate it's certainly hanging in the background here and people are extremely pleased that finally after many, many years of debate at least 12 of the 15 countries are just about to launch the new currency.

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    Why is Britain opposed to the euro?

    Giles Hogben, Italy: "How can you explain why the British are so opposed to the euro when everyone over here, in Italy, seems made keen about it?" What's the feeling where you are in Belgium?

    Chris Morris:
    Well not just Britain of course, similarly Denmark and Sweden, Giles, countries which are opting out of the euro. I think it's partly because there is still fairly considerable political debate in those countries, particularly in Britain, about the whole prospect of European integration and the euro is an important part of that. I don't see you can just say it's national pride about the pound because the German's are equally proud of the Deutschmark, the French are equally proud of the franc. But Britain's always been slightly on the edge of the European integration project and it's still there sitting on the fence a bit and I think that political feeling and also often a very Euro-sceptic debate in the British media does sort of go across into public opinion and that's why a lot of people still are very sceptical about Britain possibly joining the euro in the future.

    Bridget Kendall:
    Does it feel as though Britain's very isolated at the summit?

    Chris Morris:
    I don't think isolated, more sort of - when it comes to this issue - a bit on the margins. Obviously there's still a tremendous debate within Britain about whether to hold a referendum about joining the euro, most of the rest of Europe has moved on - they're talking about other things now, things like the possibility of a European constitution, a charter of fundamental rights, they've had their debate about the euro, they've now got the currency coming. And I think it will be quite difficult for Britain to sit on the fence forever, I think there's a feeling, not so much among British officials who would probably look at things differently but certainly among European officials that Britain has to choose fairly soon, either it comes into Euro-land or it retreats a little to the margins. And so the idea of sitting on the fence can't last forever.

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    Is the UK out of touch?

    Susan Middleton, Exeter UK: "Britain should join the euro as soon as possible, failure to do so will not help trade either within the Community or the world. For heaven's sake let's get into a new century, in a positive fashion." Does Britain seem very much out of touch in Germany?

    Rebecca Jones, Berlin:
    A lot of Germans certainly do think that Germany - that Britain is out of touch and they can't understand why Britain isn't joining the euro. They see a close relationship between Tony Blair and the German Chancellor Gerhard Schroeder, they hear all this talk that Britain wants to be at the heart of Europe and yet it doesn't want to be part of the euro. As one German said to me - Typical of German arrogance. Having said that let's not forget that opinion polls here suggest that nearly 50% of Germans aren't too keen on the euro themselves, they don't want to lose the Deutschmark. So from that point of view there is some sympathy as well for the British position.

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    National identity

    Peter Robinson, England: "Do you think that the 12 countries losing their national currency will immediately lose all sense of national identity and forget who they are when the euro is introduced?"

    Chris Morris:
    No I don't think they will, Peter, I mean they still have their national flag, they still have their languages, people, I think, are still very proud of national identity. If you talk to a lot of people here they usually say well, in Belgium for example, I'm either Flemish speaking or French speaking foremost, then I'm Belgium, then I'm European. So I still don't think that the idea of being a European first and foremost has caught on. Clearly having the same currency will bring people closer together, just in practical ways - you can go across the border from here, for example, into France or Germany within less than an hour and you can spend the same money in your pocket but I don't think people will suddenly lose their sense of identity.

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    Midnight 2002 - what happens?

    Dan Bidewell, London: "On New Year's when everyone's in a club or a bar what will happen at midnight, and the same for 24 hour garages and things like that, will they continue to use the old currencies alone until the club shuts or the shift ends or will they change at midnight?"

    Rebecca Jones:
    Well Dan in a sense this is the $64 million question - or 64 million euro question. In theory, at the stroke of midnight, you will buy your petrol or your drink in a bar in euros and you will get your change in euros. Now in practice unless you've nipped out of your bar to the cash machine to get out euros it's much more likely you'll continue to pay in your national currency, in this case obviously in Germany in Deutschmarks but your change should be in euros. And the reason for that is that bars, clubs, petrol stations, any businesses over here have been able to go to their banks since the beginning of December and get hold of euro notes and coins. So they've got the wherewithal to give their change in euros but of course how it actually happens on the night we are going to have to wait and see.

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    Alternative policies

    Gary Coathup, Evesham, UK: "Previously some countries have used a falling exchange rate to increase exports and reduce unemployment, so what alternative policies will be open to them if they join the Euro-zone?"


    Dharshini David:
    That's a really good question. Governments have essentially got three things they can use to affect the economy as a whole - that is exchange rates, interest rates and taxes. Now if you joined the euro you're fixing your exchange rates, you're kind of giving up control over that and if you fix at too high a rate, as we know from the ERM back in the early 1990s, then exports tend to suffer, jobs tend to suffer. So what do you do then? Well if you're joining the euro interest rates are fixed by the European Central Bank so you can't use those either. So the answer really is then well it's got to be tax breaks, pretty much the same as we've got at the moment actually - where manufacturers are suffering, unemployment's going up, at the moment the Government's tending to think about tax breaks, so not major things but it might help at the margin.

    Bridget Kendall:
    So you'd argue it wouldn't make that much difference to the sort of monetary policies the Government pursued inside the Euro-zone?

    Dharshini David:
    It shouldn't really, no, it can't really make a difference. Unfortunately the Central Bank have got to set one interest rate which covers the whole area, it's not easy at the best of times but in cases like that it's got to be down to regional policy and tax policy I'm afraid.

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    Pensions and the euro

    Catherine Nicholson , New Zealand: "How would the euro change the amount of pension we get sent to New Zealand?" That presumably if Britain were to join the euro.

    Dharshini David:
    pound would have been fixed against the euro anyway so it wouldn't affect the value of money you're getting in, in that sense. What does matter of course is the exchange rate against the New Zealand currency if you're then converting it into the domestic currency over there. So the answer really is not much at all.

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    Pros and cons for manufacturing?

    Dylan Gibbons, Birmingham, UK: "In an institute of accountants survey twice as many Midland members thought being outside the Euro-zone was harming their company while half that number thought non-membership was helping. So what are the pros and cons for UK manufacturing industries?"

    Dharshini David:
    Well there are a lot of them. There's a lot of argument on both sides of the debate. In a way the more you know about this the more confused you can get about it which is why there's such a strong amount of feeling about it. On the sort of pro joining side well it's really the case that we do do half our trade here in the UK with the rest of Europe and if you fix your currency, if you're using the same currency in fact, it does make it a lot easier, it makes it a lot more transparent and you can plan a lot better for the future as well and it's a lot easier to win contracts. That's the argument anyway. On the other side of the equation well again I was talking about the exchange rate mechanism earlier on, a lot of manufacturers do remember that from the early 1990s and if you fix your currency at a certain rate then it can sometimes be difficult to export, if you fix it at too higher rate, which means you lose out in terms of your markets and things like that and businesses are very worried about that as well.

    Bridget Kendall:
    So how do the pros and cons measure up in your view?

    Dharshini David:
    It's very difficult to say, as I said the more you know about this the more confused you get and I think businesses seem to be more pro than consumers are which does suggest that perhaps they think that the pros outweigh the cons at the moment.

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    Price transparency

    Steve Squires, Wiltshire, UK: This currency's going to show up the anomalies of prices throughout Europe. So what's the mood where you are - do they think that Britain to be outside the Euro-zone will seem very expensive in comparison to other Euro countries?

    Philippa Thomas in Perpignan, France:
    Well they'll wait and see I suppose how sterling settles down against the euro but you're absolutely right, price transparency is going to be one of the big issues and here it is an issue because we're very close to the Spanish border, people go and shop in Barcelona because it's the nearest big city and instead of thinking francs and pesetas how does that translate, am I getting value for money, they will know because it will all be in the euro. So that will mean that instantly they'll be able to see whether France is more competitive or Spain, they'll still have to work it out when they think about sterling of course but people here seem to think that even Britain eventually will come into the euro, what they're saying here is "it's inevitable".

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    Coin collection

    Arun Krishnan, India: Are people going to be getting proof sets and uncirculated coins to collect. Will they be doing that and do you think they're going to keep some of the old francs in their collections too?

    Philippa Thomas:
    I think people will keep the franc, they're not getting these little sets free, I have to tell you this is 15.24 in euros, it costs a hundred francs, which in sterling is about £10. And they're very interesting coins for the collector - they have abstract symbols on them of a little mask, justice scales, on the back of them, of course, the coins are different on the back in every country, on the back it says "liberté, equalité, fraternité" of course the age old French phrase. And so they're quite - they're really quite beautiful the coins. The actual notes won't come out until the 1st January, they of course will have pictures of bridges, gateways, windows - all of it's meant to be very symbolic to show that in Europe, in the Euro-zone, partners are really opening themselves up to each other. I think that's a political hope, expectation, we'll have to see if it's borne out in reality.

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    Triumph of politics over economics?

    Art Bernal, Derby, UK: "The single currency is a triumph of politics over economics but how can it provide the flexibility that it needs to succeed?"

    Dharshini David:
    That's a very good question and I think that's one of those things that only time will tell. People argue that well look, you know, the United States has got a single currency, they're doing ok, but individual states there still have the power to set taxes, in the same way that individual countries here in Europe do, that should help with the flexibility. At the same time one interest rate to 12 countries? Well if you look across the Euro-zone some parts of it are doing really well but some parts of it, such as Germany, are actually sinking into the red now and that, some people are arguing, is because there isn't enough flexibility. So it's going to be a kind of a wait and see and I think that's something that the British Government's going to be watching very closely in fact in the next couple of years.

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    Mixing the coins?

    Duncan Maxwell, UK: "Will the different national euro coins remain in the country where they're spent or will they be regularly collected and sent back to the country of source?"

    Rebecca Jones:
    Yes that's interesting Duncan and I think it picks up on something that Philippa Thomas was saying there that you've got different symbols on different coins in the 12 Euro nations. So, for example, here in Germany we've got pictures of the Brandenburg Gate and the German eagle. Now let's say I take my euros that I've obtained in Germany to Italy, for example, and spend them there they will stay there, they will not come back to Germany. And in a sense this is the essence of the whole euro debate, that symbolises, that mixing of currencies, symbolises exactly what this is, it is a single European currency.

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