Early action should reduce euro problems

The switch from local currencies to the euro would be a huge shock for the European Union's citizens, but if governments act early many potential problems could be avoided, the Director of Consumer Affairs, Mr William Fagan, said yesterday. Spending on consumer education could reduce costs for business, Mr Fagan added.

Long before the new currency is introduced, consumers should be able to get used to seeing goods and services priced in euros, Mr Fagan told a meeting of the European Movement in Cork last night. A detailed familiarisation programme would be needed, he added.

"First of all, it will give the consumer a concept of a fixed European currency where there are no exchange rate problems," he said. "Secondly, it will encourage the growth of the internal market for consumers. Thirdly, it will illustrate starkly price differences between member-states, with particular emphasis on taxation rates."

Lots of people with long memories now said that, in 1971, consumers were ripped off by price rises on the introduction of the new decimal currency, Mr Fagan told the gathering.

"My own view is that these, if they did occur, pale into insignificance compared with the massive inflation in the 1970s and 1980s. Given likely conversion rates and rules set out in EU regulations, I don't believe this will be a major problem," he added. "Competition, and not price control, is the way to ensure that prices are kept down. This was not a great feature back in 1971."

Expenditure on consumer education would actually reduce costs for business, and might actually shorten the period required for dual pricing, Mr Fagan said. Dual pricing itself should be introduced before the notes and coins actually come into circulation, and euro values for foreign transactions on credit cards would also have an educational value.

The introduction of the single currency, and possible reduction in interest rates, should encourage the growth of choices for Irish consumers of financial services, Mr Fagan added. The European Commission should support the growth of this market.

He said the situation where Britain would remain outside the single currency, initially at least, was "unsatisfactory", but that it could also represent an opportunity for Irish business and consumers alike.