Trading Up Image of the Euro in Britain; John Speck Considers What Effect, If Any, the Merger of the London and Frankfurt Stock Exchanges Will Have on British Companies

By Speck, John | The Birmingham Post (England), May 4, 2000 | Go to article overview

Trading Up Image of the Euro in Britain; John Speck Considers What Effect, If Any, the Merger of the London and Frankfurt Stock Exchanges Will Have on British Companies


Speck, John, The Birmingham Post (England)


Britain's leading companies may soon find their shares priced in euros, but that won't significantly shift the political debate in favour of joining Europe's single currency, economists said yesterday.

The birth of a European mega-bourse from the marriage of the London Stock Exchange and Frankfurt's Deutsche Boerse may see some companies priced in both euros and sterling, despite the euro's dire performance over the past year.

But, economists say, the number of British companies given a euro price tag could be small and the political fall-out limited, at least in the short term.

The British Government, sensitive to accusations of dithering on the euro, yesterday welcomed the creation of the new merged bourse as good for the City of London, Europe's dominant financial centre by far.

'It's something we welcome,' said a spokesman for Mr Tony Blair said. He added that the new exchange, christened iX, should help to reduce costs for British and other European firms and 'the cost of capital should fall over time'.

Mr Blair's spokesman suggested the development would not affect the Government's policy on the euro - to stay outside until the economic conditions are right, and then join only if voters approve in a referendum.

Economists agreed.

'If Nasdaq (the US technology market) shares were suddenly quoted in euros, would we perceive the US was about to join the euro-zone?' said Roger Bootle, head of Capital Economics.

Dominic Cummings, head of research at Business for Sterling, a pressure group opposed to Britain embracing the euro, said the 'political fall-out from the merger is a storm in a tea-cup'.

He added: 'British companies are already free to be quoted in euros but choose not to do so because of the expense, and under the merged exchange it appears it will be up to companies to decide which currencies they want to be quoted in.'

While the euro's tentacles are spreading throughout Europe's financial markets, sterling would still be the dominant pricing vehicle for UK companies in the merged bourse. …

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