Unilever wants to see UK suppliers make the switch to euro invoicing

Click to follow
The Independent Online

The debate over the UK's possible membership of the European single currency intensified yesterday after Unilever, the Anglo-Dutch consumer products giant, gave a strong hint that it wanted to see more of its British suppliers quoting and invoicing in euros.

The debate over the UK's possible membership of the European single currency intensified yesterday after Unilever, the Anglo-Dutch consumer products giant, gave a strong hint that it wanted to see more of its British suppliers quoting and invoicing in euros.

The company said that dealing in euros removed the risk of sudden movements in the value of the pound and made it easier to compare bid prices between its suppliers. But it stressed that it was still happy to deal in sterling and would not penalise suppliers that worked in the British currency.

The comments come a fortnight after Japanese car giant Toyota said it would ask its UK suppliers to use the euro when settling business to avoid exposure to currency risks. If the trend continues it will mean that an increasingly large number of UK firms will have to operate with the euro even though Britain is still out of the single currency.

Unilever said that as a company with stock market listings and headquarters in both Britain and Holland, it was profoundly aware of the impact of the strength of sterling, which has risen 19 per cent against the euro since the currency was launched in January 1999.

Mike Haines, the company's chief spokesman in London, said about one-fifth of Unilever's UK suppliers already billed in euros. "We would be more than happy if others were to follow suit. We have interests throughout continental Europe, so obviously it makes economic sense to simplify as much as we can and eliminate the vagaries of currency variations."

He said that suppliers in the 11-nation eurozone were already required to invoice in euros rather than national currencies. "As far as the UK is concerned we still operate in two currencies - euro and sterling - and our suppliers can invoice in either, but it makes things easier if it were in euros, for comparative purposes.

"If we were looking for a particular product, then if one was quoting in euros we could compare across the market without having to worry about exchange-rate fluctuations. If we are working in sterling we have to think about how that might impact on us," he said.

Unilever has already moved away from reporting its annual financial results in pounds, dollars and Dutch guilders - its three main trading currencies - to reporting in euros, with supplementary figures in those other currencies.

The move was seized upon by Britain in Europe, the pro-euro lobby group. Kitty Usshe, its chief economist, said Unilever's remarks showed that being outside the euro hurt domestic UK supplier companies as well as exporters. "These announcements by Unilever and Toyota are the tip of the iceberg. Other companies will see the advantages of following their examples as the costs of exchange-rate risk ripple throughout the British economy," she said.

But the comments will be greeted with anger and scepticism by anti-euro campaigners, who will accuse Niall FitzGerald, the chairman of Unilever, of using his company to promulgate his pro-euro views.

They will also argue that Unilever's decision merely transfers the risk and expense of conversion from euros into sterling on to the suppliers - meaning they have to bear the burden of an unfavourable exchange rate, as well as the foreign exchange costs and risks.

Comments