UK: New currency on the horizon, is Britain ready?

UK: New currency on the horizon, is Britain ready? - There is a big gap between awareness and action over EMU

Last Updated: 31 Aug 2010

There is a big gap between awareness and action over EMU

Are British businesses doing enough to prepare for the proposed single currency across the European Union? Given the lack of a positive decision about the UK's participation in the project, the question may seem a little premature to some. But for those companies doing business across the Channel - or even over the Irish Sea - the problems simply cannot be ignored.

If EMU is formally introduced on time, on 1 January 1999, many UK companies' IT systems will need to be able to reflect the fact that customers and suppliers in participating countries may prefer to trade in euros rather than Deutschmarks or French francs.

A recent survey by consultants KPMG concluded that UK businesses were the least prepared for EMU among those in EU member states. Nearly six out of 10 German finance directors thought that EMU would have a significant effect on their IT systems, a view shared by less than 10% of their British counterparts. Only a quarter of British companies have a plan for dealing with the euro and a startling 50% of those that had no plan, had no intention of developing one either. Such an approach is myopic, suggests Malcolm Stirling, a partner with the firm.

'Many of those who are aware or concerned about the impact of EMU seem to be firefighting rather than exploiting the opportunities that it will bring,' he says.

Convinced of these opportunities, several British blue-chips have decided to adopt the euro unilaterally, irrespective of the political debate. Marks & Spencer will be altering tills in its stores right across Europe - including the UK. The overall cost could reach £100 million in hardware and software conversions, estimates spokesperson Cheryl Kuczynski, adding that, until the time scales and legislation details become clearer, it is difficult to assess this any more accurately. 'We have tens of thousands of computer programmes which hold and calculate values in sterling and which will have to be changed and tested for the new currency,' she adds.

Barclays Bank is also prepared to talk enthusiastically about its preparations for the euro - viewing it as an obstacle that a number of its competitors will be unable to surmount. 'Ultimately, we think that there will be no more than 10 big players in the cross-border payments market,' says Claude Leguay, deputy director of payments strategy, adding (unsurprisingly) that he expects Barclays to be one of them. A project team at the bank began work on converting its systems to euros last September, and Leguay is adamant that Barclays will be ready on time - at least in terms of the wholesale side of the business. Euro accounts for retail and business customers will be available en masse as soon as is practicable, although larger customers should be able to have euro accounts from the start.

Some other companies, however, will soon find themselves unable to meet the presently proposed EMU timetable. Robin Guenier, executive director of Taskforce 2000, a government-backed organisation sponsored by the CBI, believes that it is 'extremely unfortunate' that EMU has come along at the same time as the Year 2000 millennium problem. 'IT jobs often run late - but these two cannot be allowed to,' he says, arguing that while 2000 can't be delayed, EMU ought to be. Otherwise, he says, businesses will be forced to tackle the two changes at the same time, with the unavoidable consequent risk that both will be bodged.

But deferral on such pragmatic grounds seems unlikely. The real winners from EMU, therefore may well be IT consultants brought in to re-programme companies' systems at premium prices, and business software firms such as Oracle, PeopleSoft and SAP whose products are likely to prove popular when replacement appears preferable to re-programming. It is hardly surprising then, that representatives from such companies are currently stressing the extent to which their software is already euro-compliant.

Political disaster though it might be, any postponement of EMU on Maastricht convergence criteria might well prove to be a necessary respite for those companies that will otherwise face huge IT costs over the next few years.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

What happens to your business if you get COVID-19?

Three bosses who caught coronavirus share their tips.

NextGen winners: The firms that will lead Britain's recovery

Agility, impact and vision define our next generation of great companies.

Furlough and bias: An open letter to business leaders facing tough decisions

In moments of stress, business leaders default to autopilot behaviours, with social structural prejudices baked...

The ‘cakeable’ offence: A short case study in morale-sapping management

Seemingly trivial decisions can have a knock-on effect.

Customer service in a pandemic: The great, the good and the downright terrible ...

As these examples show, the best businesses put humanity first.

How D&I can help firms grow during a crisis

Many D&I initiatives will be deprioritised, postponed or cancelled altogether in the next three months....