Welcome to Euroland

THE EURO is coming, and it will affect all our lives. Within six months we will be able to spend, borrow, and save in the European single currency. Some people may even be able to earn in it.

Never mind that the Government says it won't be joining the euro at the start.

Don't worry that the actual notes and coins won't be around until 2002. By the start of next year some British shops, banks, and financial companies will be as happy to deal in euros as they are in pounds. And for some people it could mean cheaper loans and better returns on investments. A wave of europhilia could be about to sweep the nation. What is the single currency? Eleven members of the European Union will merge their money from January 1999. The 11 countries - popularly called Euroland - will create the second largest market in the world to use one currency. The annual turnover of Euroland - the Gross Domestic Product (GDP) - will be staggering GBP 4,000 billion. When Britain and the others join as well, it will become the biggest economy in the world - dwarfing even the US: What will happen to the existing currencies? From 1 January 1999 francs, marks, lira, pesetas, escudos, guilders, schillings and punts will be on their way out. Shops will begin to price their goods in euros, companies will start to pay their staff in euros and people will open bank accounts in euros. At first, the change will be voluntary - the slogan in Europe is "No prohibition, no compulsion'". But, by 1 January 2002, all business in Euroland will have to be done in euros. On that date the new euro notes and coins will come into use. And six months later, on 1 July 2002, the old notes and coins will finally disappear. How is it a single currency if all the old ones will exist for three years? Although the notes and coins will continue to be used for three years, they will no longer represent independent currencies. The exchange rate between euro currencies will be fixed at the market rate they reach on 31 December 1998. The economies of the 11 countries will be locked together by the new European Central Bank which will decide on one interest rate to apply throughout Euroland. What will a euro be worth? Probably just under 70p when it starts. The exact value will depend on the relative strength of the pound. There is European currency already - the ecu - which is used for accounting within the European Union. It is worth about 68p, and the euro will be close to that. You can follow the value of the ecu on the back page of the pink Business Day section in your Evening Standard. But Britain isn't joining, so why worry? The Government has said it intends to join - and Britain is surrounded by Euroland: Ireland to the West, France and Spain to the South. Northern Ireland will have a land border with it. Although we will not technically be in the single currency, the general rule of "no prohibition, no compulsion" will apply here too. From next year, shops will be able to price goods in euros as well as sterling. Companies will be able to trade on the Stock Exchange in euros and publish their accounts in euros. From January most major banks will offer credit cards and bank accounts in euros. You will be able to write a cheque in euros. At least one bank will offer a euro mortgage. The Government has said that we will all be able to pay our taxes in euros if we wish from 1 January next year. The euro is coming in six months. We can't avoid it. When will Britain join? No one knows. But the Government wants to join as soon as our economy is running along similar lines to the Euroland economy. Before we join, there has to be a General Election and a referendum - they may well be combined. If there is a majority for joining we could be aboard within five years. But whenever we join, the euro will start to become part of our lives from January, so we may as well get used to it now. What if it all falls apart? Finance Ministers of the 11 countries in the euro will be meeting regularly to keep things on track. So much is invested in making the euro work that politicians will do almost anything to ensure it does. As a result, it may well mean that political union of the countries in the euro will happen with surprising speed. What if Britain doesn't join? Before we get to vote on joining, the euro will have been part of our lives for at least three years. Many top companies are ensuring that the euro bandwagon is rolling along with a degree of apparent inevitability. The Government here has made it clear that it will run the economy so that we will be in a position to join very soon.

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