After 100 days, outsiders feel pressure to join euro

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The Independent Online

More than eight billion euro notes and 38 billion euro coins pass their 100th day in circulation across Europe today and the smooth changeover to the single currency is putting pressure on the three EU nations which stayed outside.

The euro is now an accepted part of everyday life in 12 European countries and welcomed by a majority in all of them. But the political battle has intensified in Britain, Sweden and Denmark, which have opted out.

In Sweden polls have shown a marked increase in the popularity of the euro which commands the support of more than 50 per cent. A referendum is expected next spring.

That trend in opinion has been repeated in Denmark although the government there is cautious about setting a referendum date because it has already lost one popular vote on the issue.

The British Government is also becoming increasingly conscious of the potentialeconomic and political downside of staying out.

A leaked memorandum from the British ambassador to the EU, Sir Nigel Sheinwald, revealed concerns that Britain may lose influence over important economic decisions. It highlighted fears that the regular meetings of the 15 EU finance ministers may be pre-empted by the deliberations of the 12 ministers from the eurozone, who convene at an earlier, private gathering.

Even Eurosceptics concede that the huge logistical exercise of introducing one currency from Finland to Greece has been accomplished with remarkable smoothness.

In all, the 12 participating countries produced no fewer than 15 billion euro notes and 51 billion coins. Of those some eight billion notes and 38 billion coins were distributed to 218,000 banks and post offices, 2.8 million shops and restaurants and 302 million individuals for the 1 January switch.

Within a matter of weeks a large proportion of the billions of old coins and notes had been withdrawn. More than half of all notes had been recovered by 21 January and 75 per cent by 8 February, although the return of coins remains slower.

At the Belgian National Bank there is a mood of satisfaction. "The catastrophe scenario predicted by some never happened," said Nabil Jijakli, Head of Division at the bank. "Everything has gone very smoothly."

"It is a reality," said Gerassimos Thomas , spokesman for the European commissioner for economic and monetary affairs, Pedro Solbes. "We celebrated a successful changeover on 9 January, there is no reason to do so again."

Figures from Eurostat, which gathers data for the European Commission, show that even in the most sceptical nations, more than 50 per cent of people are happy with the new currency.

That does not, however, mean that the population of the eurozone is completely accustomed to the new currency. As Mr Jijalki put it: "The only thing that has not happened is the euro conversion of the mind. The majority of the Belgian population know the euro price for goods they buy frequently, like newspapers, coffee or fuel. But other articles, including big purchases, they often have to convert into Belgian francs."

And the debate over the benefits of the new currency to consumers is more finely-balanced.

For business, the advantages of a fixed exchange rate, which has been in place since 1 January 1999, are clear. For consumers, the benefits have been more mixed, even now notes and coins are a reality. Those who travel have already benefited from the fact that they no longer need to change their money to spend in 11 other states.

But the European Consumers' Organisation has pointed to evidence of price rises in most countries. There have been hikes in prices in specific areas, particularly hairdressers, bakeries, parking, restaurants and cafes, garages and cinemas.

Official figures record a more sober picture, however. Eurostat says inflation rose by between 2 per cent and 2.7 per cent in the month of the euro launch but a maximum of 0.16 per cent of this was due to the new currency. The Belgian National Bank says the inflationary effect of the introduction of euro notes and coins has been no more than 0.2 per cent.

Although the car manufacturer BMW is one of a number of firms which has decided to harmonise prices across the eurozone, few, as yet, make great claims for the euro's ability to depress prices by making them more easily comparable.

Dominique Forest, economic adviser to the consumers' organisation, said: "You can expect price convergence to be limited to expensive products. Consumers will have an incentive to buy items like fridges across borders but, for the time being, the impact will be limited to regions close to national borders."

Banks have yet to reduce costs for transferring cash to other eurozone countries, although they are under pressure from the European Commission to do so.

In any event, the battle lines are now drawn. The pro-euro pressure group Britain in Europe argued yesterday that, since the euro was created in 1999, Germany and France have increased their trade within Europe as a percentage of gross domestic product, while the figures for Britain show a slight drop. France has also overtaken Britain for inward investment in the EU.

Sceptics highlight the cost of changeover which, they claim would be in the region of £36bn and point to the lacklustre performance of the currency on the foreign exchange markets, where it has failed to recover the ground it lost since 1999. No one, at least, still suggests that the euro will never work.