European Economic & Monetary Union: Market Will Force Two-Currency Nation
You won't have to cross the Channel to deal in euros - you may be forced to trade with the business next door in the currency.
Pundits are increasingly coming to the conclusion that companies within the UK will end up dealing with each other in euros.
That will not be because of any Westminster or European Commission-inspired legislation, but will be forced by the market.
They believe that Britain will become a two currency nation, with business dealing in both sterling and euros.
Many large companies, particularly those with large European operations and markets, have made no secret of their wish to use the euro as soon as possible, not only for trading in the currency. but handling their internal accounting in it as well.
Mike Gardiner, of Ernst & Young, said: "The power of the single currency within the UK will gradually seep into the rest of British business because of the number of large companies looking to think entirely in euros.
"Take a company which has large markets and supply chains both in Europe and North America.
"There will be a natural tendency for it to balance its euro and dollar incomes and expenditures to make sure that it is not caught out by currency fluctuations.
"Any firm which can do this will have a natural, built-in hedge.
"There will also be a tendency for large organisations to favour suppliers and buyerseven those within the UK quoting prices in euros because of the protects them both from the risk of currency fluctuations and makes cost comparisons far easier."
Prof Les Worrall, associate dean of research of the Management Research Centre at Wolverhampton Business School, said: "The Government may make up edicts about who should do what, but often decisions about how trade is carried out are really driven by the supply chain.
"Major groups like Rover putting out edicts, such as 'from such a date you will have to tender in euros' are far more effective than Government laying down the law.
"International companies are like to tell suppliers 'you will tender, bid and only be paid in euros, no matter where you are based'.
"Companies like Rover and Marks & Spencer previously had a preference for UK suppliers but they are now rethinking that and are looking to to manage their costs by non-UK sourcing.
"Any advantage there was in dealing with them in pounds is fast disappearing.
"First tier suppliers will definitely have to comply.
"The question is how deep down the supply chain this will percolate."
According to some, the answer is very deep.
Some foresee traditional Black Country metal bashers soon using euros instead of quoting quids in their dealings with each other, simply because they will belong to the same euro-driven supply chain.
It could become customary for companies who have never even considered selling their wares beyond the Midlands to start offering dual pricing structures - in sterling for the traditionally minded, and euros for the more progressive. …