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UK's euro timetable - EMUbusiness - Issue 13

EMUbusiness - Issue 13
14 February 2001
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EMUbusiness top stories
1. Belgians publish final cash changeover plan
2. Euro unpopular with Germans and Swedes
3. Go further, faster, IMF tells eurozone
4. Beware pitfalls in payroll conversion
5. Post Office plans to make consumers life easier

Publisher's Note
British Prime Minister, Tony Blair, surprised some observers a few days' ago when he said that the British government, if re-elected, will take a decision on EMU membership within two years of coming back to power. If the pundits are correct in their assumption that elections will be held this May, it appears that therefore that the
earliest possible date for U.K. entry would be early 2005.

Allowing itself until May 2003 to review whether its self-imposed five economic tests for euro entry are met gives the British government plenty of time for two things to have happened. First, for any negative publicity about confusion (or worse) at the time of the cash changeover to have been forgotten. Second, for millions of Britons to have spent their annual holiday inside the euro area and
discovered that the advent of the euro has not been a cataclysmic event in terms of national sovereignty or cultural heritage.

The desirability of getting both those out of the way always made it anyway unlikely that the British government would review the economic tests much before late 2002. That timeframe would also allow a new Labour government time to assess whether any dent can be made in the
opposition to the euro once the election is out of the way and the downside risks of sounding positive about the euro are considerably reduced. Waiting any longer, quite apart from being difficult to reconcile with the previously announced decision to review the issue 'early' in the life of the next Parliament, would run the risk of turning the euro into an election issue the following time round.

Once the government decides that its own criteria have been met, a referendum must be held and Britain must join and stay in the exchange rate mechanism for two years. On that timeframe, British euro membership is at best some four years away.

Marion Bywater
Publisher, EMUbusiness

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1. Belgians publish final cash changeover plan
The Belgian government last week released the final cash changeover scenario for the introduction of the euro. Belgian Finance Minister, Didier Reynders, at a news conference confirmed that the government would provide financial support for the introduction of euro cash,
withdrawal of the Belgian franc and for additional security measures. The scenario sets out plans to facilitate the changeover, including measures to distribute euro cash before January 1 next year (frontloading) to banks, post offices and retailers, and in the case of coins to consumers.
Full story:

2. Euro unpopular with Germans and Swedes
Germans and Swedes are still strongly opposed to the euro. The latest Forsa poll in Germany shows that only 34% think that the euro is a good thing. 61% think it is a bad thing. This is a worse figure than that in the most recent Eurobarometer from the European Commission, which shows that support for a single currency had dropped to 47% in Germany by last November.
Full story:

3. Go further, faster, IMF tells eurozone
The International Monetary Fund has added its voice to those of the European Central Bank and the European Commission in saying that euro-area states are not doing enough to keep up the good work of the past in fiscal policy. Fiscal policies are unambitious, the IMF says, and
the recently updated Stability Programmes are described as somewhat disappointing because key countries are dragging their feet in attaining budget balances, addressing pension reform and achieving meaningful restructuring of public spending. That is reducing the scope for tax cuts which could spur demand.
Full story:

4. Beware pitfalls in mid-year payroll conversion
While it is probably theoretically possible for a company to convert its payroll to the euro during rather than at the end of its financial year, the disadvantages may outweigh the benefits to judge from a new survey by the European Accountants' Federation.
Full story:

5. Post Office plans to make consumers life easier
During the dual circulation period at the beginning of next year, the French Post Office will give a receipt showing not only the amount of the transaction but also how the change was calculated. It will thus be going one step further than the many cash-handling businesses which will have tills or other tools showing how the change was
Full story:

Coming up in euro-impact
Italy finalises its cash changeover plan; Banks and large stores in Spain announce plans to encourage customer use of the euro in the fourth quarter; NCU postage stamps - how long are they valid? How support for the euro has eroded since end-1999; EDF redesigns its invoices after customers get euro payments wrong. All these items will be covered in the next issue of euro-impact. For subscription
information .

Other stories on EUbusiness in February

Ireland gets EU public slap over its 2001 budget
The finance ministers of the EU on Monday agreed to censure Ireland over its 'inflationary' budgetary policies and ordered it to step in line with its euro-zone partners. But Irish Finance Minister Charlie McCreevy was furious that Ireland was publicly slapped down when it is the only EU country with full employment and has Europe's lowest
GDP-to-debt ratio. The Ecofin council, meeting in Brussels, said Ireland's 2001 budget was inflationary and 'not consistent' with the broad economic policy guidelines for the EU.
Full story:

Brussels calls for better economic policy co-ordination
The Commission has put forward plans for strengthening economic policy co-ordination among the 12 euro-zone countries. Recent problems over Ireland's economic policies could have been avoided with adequate advance warning about important national economic policy measures and key points of stability programmes, said Pedro Solbes, the economic and monetary affairs Commissioner.
Full story:

Poll finds strong support for euro among UK bosses
According to a survey carried out by ICM last week for the BBC, 70% of voters in Britain are against abandoning the pound and joining the euro. Not so, their bosses - if we are to believe the findings of a new survey by the London Chamber of Commerce showing support for Britain's entry into Europe's single currency has soared among London's company chiefs. The IDA poll, published by the London
Evening Standard newspaper, reveals that the proportion of London's top executives in favour of entry into Europe's single currency "as soon as possible" has doubled during the last 18 months to 40%.
Full story:

EU will help defuse pensions 'time bomb' - Commissioner
Frits Bolkestein, the EU's internal market and taxation commissioner, told a pensions' conference that Community-level action could help defuse Europe's so-called pensions time bomb. However, he stressed the real impetus for meeting the future pensions challenge - - as the
baby-boomer generation reach retirement age - - must come from individual member state governments.
Full story:

Industrial producer prices down 0.4% in euro-zone in December
The euro-zone industrial producer price index fell by 0.4% in December 2000, Eurostat estimates. It had gone up 0.1% in November. EU15 prices reversed the 0.3% November rise in December.
Full story:

Down-swing in economic sentiment indicator
The economic sentiment indicator fell in January by 0.3 points in the euro-zone and by 0.2 points in the EU, according to the business and consumer survey results published on 2 February by the Commission.
Full story:

Internet Monitor

Key indicators for the euro area
Economic statistics on the euro area, updated before each Eurogroup meeting of ECOFIN.

E-commerce and financial services
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European Economy
Business and consumer survey results (Supplement B)

EMU diary

Economic and Monetary Affairs Committee, European Parliament, 13
February and 27 February, Brussels
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Euro Workshop
The next EUbusiness online discussion forum - "Euro notes and coins - practical issues" - is on Wednesday February 21, at the usual time of 16.30 CET.

Patrick O'Beirne B.Sc. M.A. FICS., Managing Director of Systems Modelling Ltd will be moderating the discussion. Our distinguished expert panel includes Benjamin Angel, an expert in euro transition issues from the European Commission, Marion Bywater, Managing Director of Euro-impact, Noel Hepworth, Managing Director of the Institute of Public Finance, Guillaume Lepecq, consultant with the e-
Consulting Group, currently working on various aspects of the cash changeover for De La Rue and Gerard Westerhof, Euro project manager for Dutch Railways. Not to be missed.

Any Answers?
* Lyn Beltran, on behalf of a direct OEM manufacturer of Consumer Electronic products in Singapore, is looking for a web site for importers. "We have some customers in Europe and feel we have a big market there as our price is very competitive."

* Eric Kinchin is looking for information about Dominant Carrier restrictions at smaller airports.

Answer these questions, or post your own, in our Any Answers section.

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