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Betting on UK's euro referendum - EMUbusiness - Issue 21

13 June 2001, 08:26 CET


EMUbusiness - Issue 21
12 June 2001
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EMUbusiness top stories
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1. Euro to strengthen, but not spectacularly, say bankers
2. Price dispersion in food, consumer electronics still high
3. KBC seizes euro-opportunity
4. The potential systemic pressures of the changeover to the euro
5. Preparing for the euro: Chambers of Commerce show the way


Publisher's Note
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If I were a betting woman, I would not yet put money on a referendum on EMU membership in the life of the coming British Parliament, i.e. over the next four to five years. However, if I were assured that there would be a referendum, then my money would go on October or November 2002 as the date. The window of opportunity is not wide.
On the one hand, the British government needs time enough to achieve an unprecedented turnaround in public sentiment and to allow people time to forget any negative publicity surrounding introduction of notes and coins. On the other hand, it ideally wants euro entry to be a fait accompli before the likely date of the next election - in four to five years' time. Spring 2003 is technically feasible in
terms of the legal procedures and there is nothing sacred about entering the euro on a calendar year basis. Nor is there anything sacred about a three-year transition period. On this scenario, introduction of notes and coins in Spring 2005 can therefore not be ruled out. It would in any event be a foolish company which did not now start factoring such a timetable into its planning.

Regards,
Marion Bywater
Publisher, EMUbusiness
mailto:mbywater@eubusiness.com

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1. Euro to strengthen, but not spectacularly, say bankers
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Leading bank economists expect the euro to finish this year at much the same level as last, i.e. at US$0.92. The introduction of the euro notes and coins could boost confidence in the euro and bring the exchange rate closer to parity - but still not above according to a poll of chief economists of European banks and banking federations.
This is the second such six-monthly survey by the Banking Federation of the European Union. It is characterised by a much gloomier prognosis for the euro-area economy than six months ago.
Full story: http://www.eubusiness.com/item/49655


2. Price dispersion in food, consumer electronics still high
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The EU, and the euro area, are still a significant distance away from perfectly integrated pricing according to recently released research for the European Commission. The Commission will use the results of the research to draw conclusions on what policy responses and structural reforms may be needed to improve market performance. It believes it needs to explore further the role of distribution
channels (including vertical restraints), the service component usually included in the sale of durable goods, local competition conditions and the impact of national regulations on marketing activities such as advertising.
Full story: http://www.eubusiness.com/item/49656


3. KBC seizes euro-opportunity
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Belgium's KBC bank is trying to lure hoarded cash into the banking system by promoting bearer savings certificates. In so doing, it - and others who are no doubt following suit - are trying to take advantage of one of the few business opportunities for banks of introduction of the retail euro.
Full story: http://www.eubusiness.com/item/49657


4. The potential systemic pressures of the changeover to the euro
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More attention needs to be paid to potential systemic pressures resulting from the failure of many businesses to prepare adequately for the euro, the European Accountants' Federation (FEE) is arguing in a new discussion paper. FEE believes efforts to persuade companies to change to the euro, at least by January 1, 2002, will only have been partially successful. The only uncertainties are the scale of the lack of preparation (or only partial preparation) and the distribution of unprepared companies by size and sector. Consequently, the time has come for contingency planning.
Full story: http://www.eubusiness.com/item/49658


5. Preparing for the euro: Chambers of Commerce show the way
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The Paris and Florence Chambers of Commerce are this week running courses for a total of sixteen other Chambers of Commerce from across Europe to share their experiences of running a Euro Shop and Euro Clubs as ways of raising the awareness of small business of the need to prepare for the euro. Of all the best practice in SME awareness-raising which has surfaced in Eurochambers Go-Euro project, these two have been selected as being the most suited for wider dissemination. They and a number of others are described in a newly released brochure 'Preparing for the euro'. 'Preparing for the euro' is available in English, French, German, Italian and Spanish. It will be available on-line at www.eurochambres.be from June 28. The emphasis in the project selection is on those where the message is
taken direct to businesses.
Full story: http://www.eubusiness.com/item/49660


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These articles are provided by Euro-impact. Euro-impact is a monthly newsletter on the regulatory, practical and strategic impacts of the euro for companies. Articles may be reproduced with acknowledgement of the source and Euro-impact. Every reasonable effort has been made to ensure the information is correct at the time of writing.
http://www.euro-impact.com
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SPONSOR'S MESSAGE
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Coming up in Euro-impact
The role of the electronic purse in the changeover to the euro; behind-the-scenes euro preparation in the U.K.; update on anti-counterfeiting measures; public transport operators who are planning to decline legacy currency from January 1 next year. All these items will be covered in the next issue of euro-impact. For subscription information
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Other stories on EUbusiness in June
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EU GDP rises 0.5% but export growth slows
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EU 12 and EU15 GDP both grew by 0.5 per cent during the first quarter of 2001, compared to the previous quarter, according to first estimates out today from Eurostat. January to March 2001 also showed a 2.5 per cent rise in both the euro-zone and the whole EU compared with the first quarter of last year.
Full story: http://www.eubusiness.com/item/49230


Euro zone economies feel more pain
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Germany and France displayed fresh wounds this week from the global economic slowdown, adding to the mounting uncertainty over the outlook for the euro-zone. Germany reported a sharper-than-expected 1.1 per cent drop in orders placed with manufacturing companies in April compared with March. France scaled back growth forecasts, and the government touched off an angry reaction from unions and management by deciding to dip into social security funds.
Full story: http://www.eubusiness.com/item/49128


ECB chief stresses his desire for a 'strong euro' as rate is unchanged
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ECB President Wim Duisenberg stressed he had a 'strong interest in a strong euro' as he announced on 7 June that euro interest rates would be unchanged at 4.5%. Dr Duisenberg reiterated the institution's priority was combating inflation currently running at more than 3 per
cent in the euro-zone.
Full story: http://www.eubusiness.com/item/45034


Business climate indicator for euro zone falls
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The business climate indicator for the euro zone fell in May to 0.06 from 0.36 in April, marking a steady fall in business confidence with the exception of a "near stabilization" in February, the European Commission said on 6 June.
Full story: http://www.eubusiness.com/item/48958


Casinos set to clean up on E-Day
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Casinos in France are set to clean up when euro cash is launched in 2002 as the costs of the change are overshadowed by a sharp rise in income, industry experts say.
Full story: http://www.eubusiness.com/item/48598


Euro-zone industrial producer prices rise 0.3 percent in April
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The euro-zone industrial producer price index rose by 0.3 per cent in April from the figure for March, the EU statistical agency Eurostat said on 6 June.
Full story: http://www.eubusiness.com/item/48857


Retail trade volume up by 1.6% in euro-zone
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The volume of retail trade went up by 1.6% in March 2001, as compared to March 2000, the EU's statistical office reports. The corresponding figure for the whole EU15 showed a 2.1% rise.
Full story: http://www.eubusiness.com/item/48514

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This newsletter is produced in association with FEE, the Federation des Experts Comptables Europeens. FEE is the representative organisation for the accountancy profession in Europe. It is a "non profit" organisation which groups together 38 professional bodies from 26 countries, including all 15 Member States of the European Union and the 3 main member countries of EFTA. The FEE Euro Information Service is at: http://www.euro.fee.be
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Internet Monitor
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Council Watch
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Ecofin Council, 5 June, Luxembourg: Economic Guidelines agreement
http://eu2001.se/eu2001/news/news_read.asp?iInformationID=15588
Common position on UCITS directive:
http://eu2001.se/eu2001/news/news_read.asp?iInformationID=15551


A guide to Eurosystem staff macroeconomic projection exercises
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A guide published by the European Central Bank describing the way in which the Eurosystem staff macroeconomic projections for the euro area are produced:
http://www.ecb.int/press/01/pr010605.htm


"The role of financial markets for economic growth" - Duisenberg speech
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Transcript of given by Wim Duisenberg on 31 May 2001 in Vienna at the Economics Conference "The Single Financial Market: Two Years into EMU":
http://www.ecb.int/key/01/sp010531.htm


EMU diary
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19 June, ECOFIN Council, Luxembourg
25 June, Economic and Monetary Affairs Committee, European Parliament
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Community
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Euro Counterfeiting Detection Workshop, 30 May
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Transcript: http://www.eubusiness.com/item/48308
Factsheet on euro counterfeiting: http://www.eubusiness.com/item/48236
http://www.eubusiness.com/workshop/

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* In 'Find a Business Partner', Austin Rutledge from Export
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