French need to see euro to really believe in it

French businessmen never stop complaining of government intervention in the economy. So it was ironic that business executives - not central bankers - appealed to the politicians during a day-long conference on the euro organised by the Banque de France. The French public feel a vague angst about the advent of the euro, and the private sector wants political leaders to address it.

"The euro is often perceived as something people are being forced into," said Pierre Simon of the Paris Chamber of Commerce. "We need a political discourse to justify it and put it in context, to show the positive effects of the euro and place it in a European perspective."

Michel-Edouard Leclerc, who heads France's second biggest supermarket chain, said public confidence cannot be won without "a strong discourse to market the euro". It was not the place of businessmen to "sell" the new currency, he added. But unless the politicians did their job better, it would be an uphill battle.

Speeches by Jean-Claude Trichet, the governor of the Banque de France, and Wim Duisenberg, the president of the European Central Bank (ECB), were unlikely to stir proeuro passion. They focused on the €80 million (£63 million) publicity campaign that the ECB launched on March 1st, and on the transition from the "scriptural euro" (cheques and credit cards) to the "fiduciary euro" (cash) on January 1st, 2001.

A video devised by the public relations firm, Publicis, already shown at a similar conference in Dublin, provided meagre fare for questioning souls.

As Beethoven's Pastoral Symphony reached a climax, images of a pristine Europe of Alps, deserts and wheat fields, happy families and festive groups flashed across the screen. At the end of the brief tape, the ECB's slogan, "The Euro, Our Currency", hit the screen with a smacking sound. "Strong images that give muscle to our campaign," Mr Trichet commented.

Just as the businessmen had passed the proverbial buck - er, euro - to Mr Trichet, he fobbed it off on the press; always a dangerous tactic. "The press have a very important role to play," he said. The advent of the euro interested everyone, he claimed; it should "mobilise all media". As governor of the central bank, he was counting on journalists "to be powerful educational relays".

The message of the video - that life is good in Europe and that Europeans share a common culture - is only tangentially related to money. The French finance minister, Laurent Fabius, came closest to defining the euro campaign's problem. "Many need to see it to really believe in it, like many need the physical disappearance of national coins and banknotes to fully grasp the arrival of the euro."

It was the thought of 8.1 billion coins and 1.45 billion banknotes being ferried around France by train that most captured my imagination, conjuring up Wild West train robberies. That and Mr Duisenberg's statement that details of the euro banknotes could not be revealed before August 30th, to limit the risk of counterfeiting.

Michel Renault, the president of the French bank card company GCB, said 15 per cent of the public are waiting for new credit cards in the mistaken belief they need them for the euro.

Mr Fabius noted that there were only 175 days to go before the euro arrived in the pocketbooks of European citizens. "We're entering the last stretch," he said. The conversion "is the most important economic and financial reform of the past 50 years," he added.

In the meantime, fears are growing that businesses will take advantage of the currency switch to hike prices. Consumer confidence and demand would weaken in the face of inflation, Mr Trichet warned. "We ask companies to show the greatest responsibility in setting prices, and not only at the moment when we switch to the cash euro. And we invite consumers to show the greatest vigilance."

Mr Duisenberg also pleaded for stable prices, noting that under European treaties, maintaining stable prices in the euro zone is the ECB's main mission.

Yet only some businessmen are listening. Jean-Pierre Crouzet, the president of the bakers' and pastry-makers' federation, said there might be a "small" increase of 10 to 15 per cent in the price of bread - which he attributed to the cost of switching to the euro. Five weeks ago, the French Trade and Distribution Federation promised consumer groups that all prices would be frozen from November 1st for five months.

But the accord had a reverse effect; French suppliers are raising prices now to avoid being accused of profiting from the switch to the euro later. Mr Leclerc said he's told his supermarket buyers "to use a bazooka" against wholesalers who try it. Some price rises were justified: products made from hydrocarbons, such as plastic toys, electronic equipment purchased abroad with dollars, fruit and vegetables that are scarce this year because of a surfeit of rain. "But there are some increases I can't figure out," he added. "Why does my supplier of Bordeau-Chesnel rillettes give me a bill that is 12.98 per cent higher than when we last negotiated? Why has the 1.5 litre carton of Candia milk gone up 12 per cent, Danone Bio yoghurts 10 per cent, Montblanc chocolate cremes 9 per cent and President emmenthal cheese 8 per cent?"

Because the expected "Millennium Bug" did not happen, many French businessmen are taking a dangerously casual approach to the euro. "Here in France, we think we can do it with a bit of scotch tape and a few rubber bands," the head of a data-processing company complained. "Does anyone have an emergency plan?" he asked. Among the 450 guests at the conference, no one answered.

Annie-Claire Poisson, the president of the euro committee at the accountants' union, said 32 per cent of French accountants' clients plan to switch to the euro after January 1st, when the use of cheques, credit or transfers in francs will finish. "Businesses think they have time," she said. "It's hard to make them understand. In their minds, they have until February 17th (when franc coins and notes will no longer be legal tender). "And they think we'll postpone the deadline. Simply putting the amount in euros at the bottom of the page makes them think they've switched over. They think the accountants will do it for them."

Large companies have prepared more thoroughly. France Telecom, which sends out 260 million bills a year, has already converted its accounting, payroll, reporting and 70 per cent of its orders into euros. Michel Bon, the president of France Telecom, said he learned from the electricity company's mistake. When the EDF sent out bills in euros this spring, most of its clients sent cheques for the miraculously diminished amounts in French francs.

"Attention: in euros," the phone company wrote in red letters on envelopes in two test zones. There was far less confusion - and cost - than expected. The company's only mistake was posting prices in euros in large letters in phone shops, with the franc equivalent in small print in the corner. "Psychologically, it doesn't work yet," Mr Bon said. "Perhaps we should have waited."