Euro won't lower prices, say UK buyers

17 October 2001
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18 October 2001 | David Arminas

Most UK purchasers don't believe that the introduction of the euro will allow them to negotiate lower prices.

According to a survey by Visa Purchasing and Supply Management, although Britain is not in the euro-zone, nearly 80 per cent of UK purchasers in manufacturing, services and public sectors say that the euro will make price differentials between countries more transparent.

But a third of respondents in each sector did not think that the single currency's arrival in the 11 euro-zone countries on 1 January would allow them to negotiate lower prices.

"The euro is not a panacea for lower prices, but by buying in the euro you have the transparency and stability and the banks are not making money out of it," said Dave Gilmore, head of supply management at glassmaker Pilkington. The company already deals with its European suppliers in euros.

"We used to get data in pesetas, lira, deutschmarks and you would have to convert them. As well, we may not know whether our suppliers were converting using today's rate, or yesterday's rate, or a transfer rate," he said. "The euro brings stability in data gathering and to contracting further ahead without currency fluctuations."

At 58 per cent, the majority of manufacturing companies are either officially or in principle in favour of joining, according to the survey. The services sector at 23 per cent and public sector at 20 per cent are less enthusiastic.

The survey found only 12 per cent of manufacturing companies won't be ready to handle euro transactions by 1 January. About 20 per cent of services companies and a third of public sector companies were in the same position.

Respondents in nearly 80 per cent of manufacturing and services companies and 52 per cent of public organisations believe preparing for the Millennium bug was a bigger challenge than preparing for the euro.

Suppliers in the manufacturing sector are particularly keen to be paid in euros, with more than 70 per cent saying that suppliers have requested euro payments. In the services sector, only 35 per cent or respondents reported suppliers asking for euro payments, and this drops to 28 per cent in the public sector.

Manufacturing and services companies are divided 50:50 on whether they have or have not had enough advice on the making the transition. In the public sector, 80 per cent have not had enough advice.

The survey was conducted in late September and covered more than 150 purchasers and supply professionals.

SMoct2001

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