Personal Finance: Going abroad? Don't forget your euros

MOST of us are still in the dark about the euro, despite an avalanche of literature. There are just 25 days to go until e-day (the introduction of the euro currency in 11 countries on 1 January). Thomas Cook is concerned enough to be giving away reassuring euro-made-easy leaflets to travellers.

The Association of British Insurers (ABI) is considering a central industry helpline to help consumers uncertain as to what European Monetary Union means to them.

Insurance is an area where we may well see more European names coming into the UK, while our companies expand abroad. So all insurance companies with "eurozone" business will need to be able to undertake currency conversions, although most contracts will continue to be in the national currency of participating member states. The switch to euros will be made at renewal for most policies. Lloyd's of London, for instance, is to offer its members the ability to convert euro payments to sterling.

All our investments will be affected by the euro because the banking systems must be modified to take account of it. If you invest in a unit trust, for example, the first few days of next year may prove chaotic.

Alison Michell, senior policy adviser and chair of the EMU working party at the unit trust trade body, the Association of Unit Trusts and Investment Funds (AUTIF), says almost all UK investment funds are likely to be affected.

At a global funds conference earlier this year, Ms Michell expressed concern that fund managers might not be able to make accurate valuations - usually produced on a daily basis - of portfolios containing euro stocks on 4 January, 1999 and the days following.

So try not to sell early next year, and don't be alarmed. Firms are working hard to get their computers ready. Ms Michell is now confident that firms have got the message and are trying to ensure a smooth transition.

She says: "We have done as much as we can to make firms aware of all the implications and the level of awareness in the investment fund industry is now very high. A lot of major firms are testing all their systems to make sure things run smoothly." AUTIF suggests we will be insulated from any impact and Ms Michell does not expect share prices to be much affected, even though markets may fluctuate.

While the UK stays outside EMU the euro will be a foreign currency and will not be legal tender. But some businesses will wish to use it; and the cost of getting firms into shape for European Monetary Union is likely to be three times as much as the preparations for the year 2000 .

It is not surprising that some firms are ignoring the euro, seeing it as just another foreign currency, but most of the financial services world has to take the change seriously.

A survey carried out last year by KPMG, the international consultancy, among companies with a European headquarters found that 83 per cent of finance companies had a strategy in place to deal with adapting to EMU, compared with 58 per cent in manufacturing.

Rory Colfer, principal consultant in KPMG's EMU unit, believes the consumer will barely notice the changeover.

He says: "People overseas will get used to seeing prices in euro and you will see the euro symbol in any hotel you stay at in Britain.

But for the consumer, everything depends on what the euro does. How will sterling react to the euro? None of us really knows."

Useful websites:

Association of British Insurers: www.abi.org.uk

European Commission: http://europa.eu.int/euro/

HM Treasury: www.hm-treasury.gov.uk

Bank of England: www.bankofengland.co.uk

EmuNet: www.euro-emu.co.uk

Government's euro site: www.euro.gov.uk/

Consumers' Association: www.which.net

Citibank: www.citibank.co.uk;

Helen Nugent writes for 'Financial Adviser'. She was named 'best newcomer' in the annual Norwich Union Healthcare Awards for journalists.

welcome to eurozone

After 1 January:

It will be possible to buy and exchange euro travellers' cheques for sterling. Usual charges and commissions.

UK cheques denominated in euros will be available - they are expected to be predominantly used by businesses.

Euro credit cards will be available.

Some shops may accept credit card euro payments (there will not be any euro money until 2002).

Some banks will offer euro bank accounts. Citibank is the first bank to announce firm plans for a UK-based euro account.

When you go shopping abroad, prices will be displayed in euros and the local currency.