Less than one fifth of all UK companies will support European Monetary Union (EMU) by the end of the year, indicating severe apathy and a lack of understanding of the issues.
UK businesses are neither aware enough nor understand the problem sufficiently because the country has not yet joined EMU. But this could lead to an inability to compete in global markets and generate higher costs than the $12.7 billion that IDC has projected it will take to convert to the euro.
The least well prepared sector is retail, with only 12.5 per cent expected to adopt euro conversion software in the near future. Philip Fersht, research manager for IDC?s European vertical markets programme, said: "The single fact that 44 per cent [of retail stores] haven?t addressed the issue at all yet causes concern and it is possible there will be problems, the majority felt around 2002 when the UK is scheduled to join EMU."
He warned that this lack of action now would be a major stumbling block in future as companies struggle with the "nitty gritty", trying to deal with everything from integrating historical data and changing invoices and even barcodes.
But, he added, the huge cost of euro conversion could hit small to medium sized enterprises (SMEs) hardest because they lack the necessary inhouse resources to deal with it. "Companies with over 500 employees tend to have more IT aware finance directors, whereas SMEs will be more reliant on packaged systems and external consultants to reconfigure systems, which will be costly."
On the other hand, IDC found that the banking sector was most prepared for EMU and that by December, nearly 70 per cent would have completed their euro conversions. The finance and insurance market was taking a much more gradual approach, however, with only 25 per cent expected to be ready by December and about 50 per cent believing no changes were necessary.
And about one third of the manufacturing industry expected to be compliant by the end of 1999, due mainly to its strong ties with European and global companies that are based in Britain.
Fersht concluded: "The complexity of the involvement with Europe affect companies? thinking, and the manufacturing industry is dealing directly with lots of suppliers from different countries all the time."
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