 Joining the euro has pros and cons for this button making company |
Although the UK has not joined the single European currency, there can be few companies whose businesses are not affected by it.
Previously on Working Lunch we visited a Skegness firm which sells children's rides across Europe.
It had to adapt the mechanisms so they would take the new coins.
But even businesses you might think would be unaffected have had to change their ways.
Household goods
Keith Slater and his two partners run a shop in Oxfordshire called Essence.
It sells linen and other household goods from all over Europe.
Things are easier now for Keith, who travels around the continent buying textiles.
"In the past, you'd be quoted a price in French francs or Spanish pesetas or Italian lire or German marks and you'd then have to go away and do your calculations and turn those into sterling and see what you were going to retail it for," he explains.
"It was very difficult to do all the comparisons, one against the other."
But while deciding if products are good value has become simpler for traders like Keith, other aspects of the euro are less welcome.
Before, if the franc rose against the pound, making French goods expensive to import, Keith could look to another market.
But now there's just the euro, and it's been performing very well against sterling recently.
Imported price
"It's come down from 1.60 to around 1.50 and my guess is that it's going to go even further," says Keith.
"That obviously, if you're buying out in Europe adds to your costs and therefore to the imported price and to the price the customer pays in the end."
>For businesses which are more involved in exports, however, the reverse can be true.
In west London, Dewhurst makes buttons for lift manufacturers in Europe and the US.
An order for a skyscraper could be for 5,000 buttons, so it's a small company trying to survive in a big industry.
"The rise in the euro has had a beneficial impact on our profitability because it's enabled us to improve our margins slightly in the European market," says Richard Dewhurst.
More competitive
"It has also had an improved impact on our perfomance in other markets around the world.
"We're now more competitive in the States and in the Far East than we were before."
Dewhurst used to send bills to all its customers in pounds, whether they wanted it or not.
Now, with one European currency, it has been forced to change its system.
"Our customers really wanted us to sell to them in euros and with the single currency being there we were able to do that," says Richard.
"It's also had a knock-on impact in that having set it up for the euro, we've been able to use it for other markets as well, for example, in the States."
So both large and small companies, manufacturers and retailers, are finding that the euro is having a big effect on their business.
Student Guide
The euro has been in everyday use on the Continent for just over a year - so how's it going?
Two different businesses which trade with Europe have helped us to find out.
Dewhurst makes electrical control equipment and sells its products to manufacturers in Europe.
Essence buys and sells household textiles
Easy buying
Dewhurst makes equipment for lifts and cash machines.
Two of its main customers - Schindler and Thyssen - are both based in the eurozone.
Dewhurst traditionally dealt mainly in sterling, but since the introduction of the euro, the company now prices and invoices in that currency.
The changeover was very smooth and just involved adapting the software on its accounts systems from pounds and pence to euros and cents.
Just think...
What are the advantages to a business of selling in euros instead of in different currencies?
Easy selling
Essence buys bedding and other household textiles to sell in its shop in Oxfordshire and to customers across Europe.
When Keith Salter of Essence goes to Paris to meet buyers from European countries, deals are much easier to make because customers can compare.
Just think...
What are the advantages to a business of buying in euros instead of different currencies?
But when businesses are surveyed, they are often not certain about whether the UK should join the euro.
More than 60% of the members of the Engineering Employers Federation send out bills in euros 75% are happy that the UK is a member of the European Union But fewer than 50% are sure about joining the euro. Why?
The interest rate for the countries which use the euro is set by the European Central Bank.
It has to make a decision about the best rate to keep the euro and European economies on the right track.
As interest rates are the cost of borrowing money, changes can affect how people and businesses spend and borrow.
Just think...
Draw a spider diagram to show how a rise in interest rates might affect
a family a business. Who's affected by interest rates?
If unemployment is high, a country needs low interest rates to encourage people to borrow and spend money as this creates jobs.
If inflation is high, a country needs higher interest rates to persuade people to cut their spending and stop pushing prices up.
Just think...
Not all countries in Europe have the same levels of unemployment or inflation so the interest rate set by the European Central Bank may not suit everyone.
What will happen to unemployment in a country where unemployment is high and interest rates go up?
What will happen in a country where inflation is high and interest rates are cut?
What might happen to a business in a country where there is lots of unemployment?in a country where prices are rising faster than elsewhere?
Why do you think businesses are not certain about joining the euro?
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