Celebration party

The last formal decision required for the adoption of the euro as our national currency was taken earlier this month. It was marked by a celebration in Brussels as befitted the occasion. Although membership of the euro zone has not been in doubt for the last three months or so, the definitive judgement has now been delivered and there is no going back. The work by the National Euro Changeover Committee has been intense and the marketing campaign of the last 24 months has most certainly prepared the country for the change.

Awareness of the change is high and the business sector has responded admirably so far.

The key concern about what will happen to prices is still there, and I do not believe that it should be swept under the carpet. If we expect reasonable and responsible actions by the business sector, the issue of prices must be kept high on the agenda, under everyone's attentive eyes, especially since other international market conditions might push up prices for a number of consumer goods anyway.

However, we also have to face what I consider to be a more fundamental issue. Business needs to prepare itself fully for the adoption of the euro and this requires a great deal of work.

There are some issues that look more like form rather than substance. However, not addressing such issues may seriously jeopardise the continuity of the business. For example, will retailers be modifying or introducing new cash registers? How will IT systems that are programmed to issue invoices, be modified to take account of the euro? Are our IT suppliers and consultants geared up to take on the additional work that the euro changeover is bound to bring about? What about pre-printed stationery? And what about the most critical issue - people? Are they going to be adequately trained to handle the euro currency?

On these issues there is an evident cut off date which one cannot escape or delay. Then, there are other issues over and above these business continuity issues; issue which relate to financial reporting and where the changeover is more gradual but just as critical. There is not just the issue of the preparation of audited financial statements and tax returns. There is also the issue of management accounts. Are accountants and auditors fully geared up for these challenges? These challenges are not restricted to technical aspects, but include also the change management process.

On a higher tier are business planning issues. The change process is even lengthier in this case, but equally requires serious preparation. A lack of preparation in these areas may not kill the business in January 2008, but would slowly and steadily erode the business competitive edge. I am referring to exploiting the opportunity of the euro changeover in the purchasing decision. The euro changeover will reduce currency exchange risks, but will also provide buyers with greater transparency in the purchasing process, which if exploited fully could lead to cost reductions.

On the selling side, small- and medium-sized enterprises seeking to export their goods and services may achieve increased market penetration because their customers are in a position to assess better what they are offering. Moreover, trading in an international currency such as the euro facilitates commercial activity even outside the euro zone. Exploiting these opportunities will take time, but require that preparations start from today.

It has probably occurred to several persons, that membership of the euro zone will seal once and for all the EU membership issue of this country. As long as we stayed out of the euro zone, there could always have been the possibility of taking Malta out of the EU. Taking Malta out of the EU and the euro zone will be very costly and will spell nothing short of a disaster of cataclysmic proportions for our economy. Thus, the euro decision is a decision that brings about a great deal of certainty. When there is uncertainty, business holds back; on the other hand, when there is certainty, the work starts in earnest. There is only five and a half months left and we are at the stage where work must start in earnest.