PREPARATIONS FOR EURO ESSENTIAL - TÁNAISTE ILL PREPARED FIRMS TO FACE DIFFICULTIES - HARNEY STERLING/EURO RATE TO BE WATCHED CLOSELY

Tánaiste Mary Harney in addressing the Euro Convention in Dublin today (Thursday 22nd October) said "The euro's introduction on 1 January 1999 will present new opportunities and challenges for Irish business. In order to avail of these new opportunities Irish companies will need to be fully prepared and have carefully considered the key implications which the introduction of the euro may have on their businesses."

"Those enterprises that are prepared for the euro have a great window of opportunity to get out of the starting blocks early and exploit that competitive advantage. On the other hand firms that are not prepared, or ill prepared, for the euro are likely to face severe difficulties", Tánaiste Mary Harney warned.

Apart from issues of preparedness, the principal challenges for Irish business at the start of EMU on 1 January 1999 include: the decision by the UK not to join EMU; the shadow of recession currently threatening many economies in the developed world; and the maintenance of continued economic and export growth in Ireland against a backdrop of declining world economic activity.

The effects of swings in sterling's value against the new euro could be significant given the extent of our extent of our trade with the UK, i.e. 24% of our exports and 34% of our imports with the UK in 1997.

"While the UK may join EMU at some stage in the future, the fact that Britain continues to remain outside the Single Currency from 1 January 1999 is a situation that will need to be watched closely," the Tánaiste said.

The recent turmoil in world financial markets has created great uncertainty threatening the well-being of most world economies, with some international commentators predicting recession in the industrialised world. Despite this economic foreboding, there are within the past week, signs of hope that such world recession can be averted. "It is imperative that confidence be restored to world financial markets which confidence could encourage economic growth throughout the developed world", the Tánaiste said.

Despite recent difficulties in world markets, the advent of membership of the EMU still promises significant opportunities for this country. "The removal of currency risk and the administrative problems and costs associated with dealing in foreign currencies are of very significant importance to Irish exporters trading in the single currency market", the Tánaiste commented. For a country as dependent as Ireland on exporting to world markets this is a major opportunity which will allow Irish exporters to increase their trade with Europe, and therefore lessen the dependence of Irish industry on the UK. The advent of the single currency market will provide even greater outlets for indigenous exporters, in products and services where Ireland has demonstrated that it can compete effectively on world markets with world class products.