Alison Cottrell: Advice to European ministers: lie back and think of Barcelona

The euro is here and opportunity knocks. Even more reason to keep an eye on reform

Few things in life are as complicated, circuitous and time-consuming as EU politics. But Belgian politics is one of them. In this sense, Belgian prime minister Guy Verhofstadt may be finding his six-month spell in the EU presidency chair a home from home, and not only because of the familiarity of his Brussels surroundings. Few of his peers can boast comparable experience of negotiating between large numbers of opinionated individuals expressing disparate views in assorted languages.

Negotiation, however, is not the same as communication, and the latter – never the EU's strong point – has rarely been in greater demand or shorter supply. As the rush-hour traffic in Europe's capitals returns to normal, politicians could be forgiven for turning pale beneath their suntans at the challenges waiting on their desks. Slowing global growth; last-minute preparations for the euro; overshooting budgets, and uncertainty among EU finance ministers over what constitutes an appropriate collective response; an apathetic general public; and EU enlargement just around the corner (and that little matter of the Irish rejection of the Nice Treaty still to be resolved).

Combine this with a December summit intended to clarify the agenda of a 2004 Inter-Governmental Conference prodding that most sensitive of subjects, the relative powers of EU institutions and member states; stir into the pot a Belgian finance minister intent on putting the taxation of short-term foreign exchange transactions on the EU's agenda. Add a liberal sprinkling of the sort of vocabulary that financial markets and UK newspapers rarely warm to – words such as "integration", "harmonise", "social protection", or "rights"; and wrap all this up in speeches about the need to preserve a distinctly European "social model"; and it may be difficult to discern in the EU of autumn 2001 the dynamic, reforming, competitive economy targeted by its leaders only two years ago in Lisbon.

And in the UK, visibility may be even poorer than usual. Repeated government calls on the EU to remedy its structural shortcomings and play a global role do little to improve the EU's public image, however justified or necessary the admonition.

Differences between the UK and Brussels are not always large or profound. The difficulty is that this autumn they may appear anything but. Not surprisingly, ministers are already encouraging investors and voters to shut their eyes and think of Barcelona – the venue, next spring, for the EU's third summit on employment and structural reform. The case for looking ahead rather than down rests, however, on more than political expediency.

If Rome wasn't built in a day, EU policy certainly isn't made in six months. However much time may be devoted to discussion of a tax on currency trading when EU finance ministers meet later this month in Liège, Spain is extremely unlikely to pick up this particular baton when it takes over the EU presidency in January. A new EU tax, tax harmonisation and other such initiatives can also be expected to be put back in their box.

And as Spain arrives in Brussels, euro notes and coins will be arriving in the wallets of the majority of EU citizens. The media focus will begin to shift from the logistics of the euro's introduction to its consequences, and these may be much broader than is often appreciated.

If the euro's primary purpose in life were to allow consumers in Hamburg to spot a bargain in Capri and avoid hefty conversion charges, the whole exercise would scarcely have been worth the effort. The internet, credit cards and competition policy could have produced most of the benefits with none of the upheaval. EMU, however, reaches the parts other policies fail to reach. When the currency border no longer matches the national border, everything changes; and the genie escaping from the EMU lamp is not so much consumer price transparency as competition.

For companies, this implies increased competition to attract and retain customers and investors: in particular, those domestic shareholders no longer obliged for reasons of exchange-rate risk to keep the bulk of their assets at home. These less loyal investors will also be better informed about alternatives (thanks to the internet), less risk-averse (low inflation prompts a search for better returns than offered by bank deposits or government bonds), and less tolerant of underperformance (especially against a background of ageing populations and rising pension liabilities). A recipe, in short, for more demanding shareholders, increased merger and takeover activity, and more pressure on companies to comply with international standards of accounting and corporate governance.

For banks and other traditional lenders, heightened competition for borrowers and savers comes not only from other financial institutions elsewhere in the euro area. Raising funds directly from broadening and deepening capital markets, via bond or share issues, will become a realistic option for a wider number of corporate borrowers.

And what is sauce for the private-sector goose applies just as much to the public sector gander. Governments will find themselves competing ever harder for employers, entrepreneurs, taxpayers and investors, all enjoying greater choice as to where they pay their tax or buy their government bonds.

Certainly, facilitative legislation is needed to allow the potential of much of the above to be realised. Equally certainly, experience triumphs over hope that such action might be speedy. Procrastination, obstruction and miscomprehension are long-established EU residents and show no inclination to retire. The single currency's effect on the single market will come not as a big bang, but as a gradual transformation, with unpredictable consequences.

Reconciling this picture of competitive flux with that of the EU in late 2001 may not be easy. Viewed from the UK, it may be particularly difficult. But while there is ample reason in the near term to be cautious, there is ample reason, too, to keep a sense of proportion. Europe is changing; the challenge over the coming months will be to look beyond the speeches and headlines trying to argue the opposite. Closing one's eyes is rarely sensible in either economics or business, but thinking of Barcelona may not be a bad place to start.