French SMEs still unprepared for euro, government warns

With less than a year to go before euro notes and coins replace the franc, far too many small businesses have still done absolutely nothing to prepare for the arrival of the single currency, the French government is warning.

This week, French Finance Minister Laurent Fabius unveiled a 10 million franc (1.5 million euro) publicity campaign designed to encourage small and medium-sized enterprises (SMEs) to get ready for the euro switch. According to a recent survey by the IFOP polling organisation, 42% of French SMEs have made no preparations whatsoever for the end of the franc.

This figure is just not good enough, said Fabius as he launched the new publicity drive. The government is worried that if too many small firms leave it to the last minute to adapt their payrolls and accounting systems to euros, the French banking sector could suffer a serious crisis when euro notes and coins finally arrive on 1 January 2002.

In its monthly bulletin published earlier this week, the Banque de France (BDF), confirmed the government's gloomy analysis. The bank insisted that for the arrival of the single currency in French wallets to pass without any major hitches, the majority of French SMEs must switch their accounting systems and banking operations to euros by the end of June this year.

The new euro information campaign got underway this week with a series of radio and television adverts explaining how firms should get ready for the single currency. Fabius explained that the government was not trying to panic the small business community, but wanted to make it clear that switching currencies would require a certain amount of preparations. The government estimates that an SME employing fewer than six people will need about three months to make the necessary administrative changes.

You don't need to be a financial wizard to switch to the euro but companies do need to start getting a move on, he explained.

But despite the government's repeated warnings, most SMEs on the ground seem to have other concerns than the imminent end of the franc. According to the IFOP study, nearly half of all French businesses (49%) say they will not be ready for the euro by the January 2002 deadline. As separate surveys show that France's big businesses are already well-prepared for the changeover, it is assumed that the majority of the laggards are SMEs.

The IFOP poll also found that within the group of firms that do not expect to make the euro switch before 2002, 17% seemed totally unconcerned about the arrival of the single currency. This 'hard core' of businesses said they will make the necessary changes when the time comes, and had not planned any special measures to prepare for the single currency.

In a bid to overcome this indifference, France's main small business lobby the Confé¤©rartion Gé®©rale des Petites et Moyennes Entreprises (CGPME), is mailing 60,000 detailed brochures on the practical aspects of switching to the euro to its members. These Euroguides include a questionnaire designed to help small business leaders see whether they have made the necessary preparations for the arrival of the single currency. The CGPME also plans to organise a number of regional seminars and conferences to help explain the practicalities of the euro to France's SMEs.

The organisation has also warned its member companies that waiting until the last minute to switch from francs to euros could end up costing them dearly. It argues that it is in companies' interests to covert their capital into euros during the current transition period between the two currencies.

Waiting for the automatic substitution of the two currencies on 1 January 2002 will not necessarily be the cheapest option, the CGPME warned in a recent statement.

An increasing number of analysts are beginning to share the view implicit in the CGMPE's statement that the euro-zone's banking community is gearing up for a bank-charge bonanza with the arrival of the single currency. This theory certainly appears to be borne out by a recent survey conducted this month by the Ipsos polling group at the European banking community's annual get together, the 'Interbancario'. According to the Ipsos study, 81% of Europe's bankers feel optimistic about the arrival of the euro and an impressive 90% have a positive view of the single currency. By way of comparison, a recent survey of the general public found that just 53% of Europeans in the street think the euro is a good thing.