ICI puts suppliers on notice over euro

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The Independent Online
Imperial Chemical Industries warned suppliers yesterday they would be frozen out of its pounds 5bn-a-year purchasing programme unless they switched to the euro from day one. Meanwhile, a senior European Commissioner warned of the threat posed to business the longer the Government stayed out of the single currency. Michael Harrison reports.

Charles Miller Smith, ICI's chief executive, said the "prejudice would be against" any suppliers who failed to adopt the euro from 1 January, 1999. The group would insist on pricing in euros from suppliers across Europe from day one.

ICI has several thousand European suppliers, several hundred of which are British, while annual sales to countries likely to adopt the single currency are about pounds 2.3bn a year.

ICI estimates that switching to the euro will save it pounds 15m a year in treasury costs - about the same as the one-off cost of adapting its computer systems to cope with the single currency. The millennium bug will cost it pounds 80m.

Earlier this week Rover, the car group which is now owned by BMW, said it expected all its suppliers to have converted to the euro by next year. Rover purchases pounds 4bn worth of components a year, 85 per cent of which are UK-sourced.

Meanwhile, Yves-Thibault de Silguy, the European Commissioner for Monetary Affairs, warned that failure to join a single currency could deter inward investors and put British companies at a disadvantage to their continental competitors. Speaking in the City last night, he said: "How long will British companies want to bear the cost and exchange rate risk of non- participation as they do business in other member states? These are costs their competitors in the euro zone will not have."

The strength of sterling knocked pounds 190m off ICI profits last year. The group said it expected exchange rates to remain about the same this year.

Investment column, page 22

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