European firms fail to prepare for EMU

Most of Europe's top companies have failed to do any detailed work on preparing for monetary union, according to a survey by KPMG Management Consulting.

Despite this, the finance directors of 301 large companies overwhelmingly expected their home countries would join the single currency. Europe-wide, the figure was 93 per cent and in the UK it was 77 per cent.

Furthermore, 56 per cent of all finance directors questioned expected their countries to join in 1999, a figure which shrank to 39 per cent in the UK.

KPMG said 80 per cent of companies had not estimated the costs of adapting to EMU and only 8 per cent had set aside a budget to deal with it. In this response, the UK is broadly in line with the European average.

Alan Reid, European head of the consultants, said: "The 80 per cent of companies that have failed to undertake such a fundamental estimate have very little time to prepare."

The consultants accused European companies of only considering short- term issues and ignoring the long-term consequences of monetary union.

Vicky Pryce, chief economist, said: "It is astonishing that such a large number of respondents had overlooked the effects of EMU on international marketing strategies.

"It will have a number of serious implications for this area, the most immediate of which is that greater price transparency will make it difficult for goods to be sold at different prices in different countries."