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Report by the working party 'Small business and the euro'.

Report by the working party 'Small business and the euro'.pdf

Results of the work

Following the Round Table on the practical aspects of the shift to the euro, which was held in Brussels on 15 May 1997, the Commission decided to set up an Expert Group on small businesses and the euro consisting of representatives of professional organisations, SMEs, the craft sector, the commercial sector and the tourist sector. This Group held a number of hearings attended by experts and company heads. Particular attention was paid to small retailers.

While underlining the advantages of the euro for European businesses in general, the Group identified two main types of constraint of particular concern for small businesses. The greatest difficulties relate to the accounting consequences of the shift to the euro. The second kind of constraint is the shortage of human and financial resources with which small businesses have to contend. The group stressed the need to encourage small businesses to give consideration as of now to their staffing requirements for the shift to the euro and as soon as possible to earmark funds for tackling this problem successfully.

The Group examined the situation in the sectors which are the most exposed to the problems of adapting due to the predominance of small businesses which are largely dependent on their suppliers or partially integrated with them, whether in computer-related, logistic or commercial terms. This applies in particular to small retailers, travel agencies and petrol stations.

Although small businesses which are subcontractors of large companies or multinationals will certainly be under pressure from the latter to shift very quickly to the euro, the position of the small businesses in direct contact with consumers is quite different. The Group therefore paid particular attention to the risk that these small businesses might be wedged between their suppliers, who would decide to use the euro without delay, and the need to continue using their national currency with consumers. This riskwas considered to be quite low by the Group, which concluded that a crisis scenario was highly improbable. Many large companies which deal with large numbers of intermediaries in direct contact with consumers are fully aware that it is not advisable to impose the euro on them for all their operations if the latter are not properly prepared for the shift. In addition, certain large companies, for a variety of reasons, will also wait before making the changeover.

The Group therefore considers it essential that small businesses should start to consider the impact of the changeover to the euro on their activities, even if that does not necessarily mean it is in the interest of every small business to speed up this changeover. Every business will need to examine the attitudes of its clients and suppliers vis-à-vis the shift to the euro, and it is only then that the head of the company will decide what is, for him, the most opportune moment for the changeover.

Information was seen as vitally important for small businesses, and the Group could only conclude that the majority of heads of small businesses are very short of information. It therefore considers there is a need for information projects targeted at small businesses. In addition to addressing the problem of SME access to the traditional sources of information, these projects would also take very practical account of the questions which the managers of such businesses are asking themselves.

The Group considers that all the intermediaries who deal with businesses (banks, accountants, chambers of commerce, professional organisations, tax authorities, business consultants and the Euro Info Centres) must make an effort to help small businesses adapt to the euro. Their role should consist in making adequate information tools available to small businesses and responding to their specific requests with regard to the changeover.

The Group therefore considers that:

  • a company should not issue invoices exclusively in euros without giving a certain period of notice to enable its trading partners, particularly small businesses, to make the necessary preparations;
  • if a small business requests its supplier to maintain, in its invoices, prices in national currency alongside its prices in euros, the latter should comply with the request;
  • national authorities and professional organisations should encourage large and small enterprises to engage in negotiations to achieve agreement on the respect these two principles;
  • it is desirable that small businesses should already be considering the consequences of the introduction of the euro by establishing a timetable for the action that needs to be taken, in particular with the aim of ensuring the availability of sufficient resources for adapting their computing and accounting systems and by making adequate financial provision for the necessary investments;
  • information and preparation projects specifically aimed at small businesses, in particular small retailers, need to be organised with the aim of taking their special situation into account.
(Euro Papers. 20. February 1998. Brussels. Tab. Ann. Free.)

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