1. WHY HASN’T THE EURO HAD MORE IMPACT ON OUR LIVES?
The euro is alive and relatively well. But we don’t see much of it for two reasons. First, Britain hasn’t joined. Second, even in the 12 countries that have, people still use the old currencies in daily life. Although most goods are now priced in euro as well as the old currency, euro notes and coins have not been introduced yet.
2. WHEN WILL THAT HAPPEN?
Very soon. On 1 January 2002 euro notes and coins will come into use in the 12 euro zone countries - Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. By the end of February all the old currencies - the mark, franc, drachma, lire, peseta etc - will all be consigned to history. The euro will also be used in several other countries such as Andorra, Vatican City, and Monaco. Altogether, more than 300 million people will use it. Holidays in Europe will feel very different a year from now.
3. WHAT WILL THEY LOOK LIKE?
Very modern and European. There will be seven notes from €5 to €500 and eight coins from 1 cent to €2. The notes will be the same throughout the euro zone. And so will the ‘tails’ side of the coins. But each country will be able to have its own design on the obverse - the ‘heads’ side - of the coins. The designs are all available on the internet if you want to see them. More than 14 billion notes and about 250,000 tons of coins will be put into circulation in just a few weeks. Note that in English the plural of ‘euro’ is ‘euro’ and the plural of ‘cent’ is ‘cent’. Only in French, Spanish and Portuguese does the plural take an ‘s’. And only in German does it have a capital ‘E’. Don’t ask….
4. OK. WILL IT BE CHEAPER TO CONVERT MONEY WHEN WE GO ABROAD?
You will still have to change your pounds into euro. But once you have done that you can travel throughout the 12 countries without changing again. So it will save bank charges for people who visit more than one European country. Your old notes and coins will be convertible into euro free at euro zone banks. As I write a euro is worth about 64p. For a rough conversion of euro to pounds, divide by 3 and multiply by 2.
5. WILL THE EURO BE USEABLE HERE IN THE UK?
No, not normally. It will be a foreign currency. But just as some big shops and hotels will accept dollars or Deutschmarks or yen now, some will accept euro. But they will normally impose a charge to convert them to pounds Sterling.
6. I HAVE HEARD OF PEOPLE OPENING A BANK ACCOUNT IN EURO. HOW DOES THAT WORK?
You can open an account at some banks in any of the major foreign currencies, including euro. However, unless you are paid in euro or have expenditure in euro there is no point. If you have a home in France or Spain or other regular expenses in the euro zone then it may be a good idea so that you can write cheques or transfer money to people there.
7. INTEREST RATES ARE LOWER IN EUROPE, CAN I TAKE ADVANTAGE OF THAT?
Interest rates are slightly lower in Europe. The bank base rate is 4.75% compared with 5.75% here. In theory you could take out a mortgage in euro. But in practice it is not a good idea. The mortgage market is so competitive in the UK that the actual interest rates charged to borrowers are as low or lower than the rates customers are charged in the euro zone. Also, you will have to repay the loan in euro. If your income is in Sterling, you will have pay the cost of converting several hundred pounds each month and your payments will go up and down as the exchange rate alters.
8. WHICH COUNTRIES ARE STILL OUTSIDE?
The UK of course. Sweden is still out, partly for technical reasons, and will probably have a referendum on joining in 2003. People in Denmark voted 53% to 47% against joining the euro in a referendum in September 2000. Greece joined in January this year.
9. DID ALL THE OTHER COUNTRIES VOTE TO JOIN?
No. The eleven others joined on 1 January 1999. But there were no referendums on joining in any of them. A recent opinion poll in eight euro zone countries showed a majority in most of them against the euro. Only Luxembourg was strongly in favour.
10. WHAT HAPPENS NEXT IN BRITAIN?
That depends on the next General Election. If Labour wins, and the Government considers that it is in Britain’s economic interest to join, it will call a referendum. In practice, it is unlikely to do that unless it thinks it will get a ‘yes’ vote. If Labour loses the Election, then it is almost certain we will stay out for at least five years.
Webwatch
Information and pictures about the euro europa.eu.int/euro/html/home5.html?lang=5
www.bbc.co.uk/moneybox Radio 4’s personal finance programme
17 February 2001