The euro preparedness of Finnish companies improved significantly in the first half of the year. More than nine out of ten small and medium-sized companies (SMEs) have a plan for the transfer to the euro. The switch to euro cash may place downward pressure on prices, as Finland's prices are currently the highest in the euro area.

That Finnish companies have significantly improved their euro preparedness became evident in a EU Commission survey this summer, which showed that 96 per cent of Finnish SMEs have formulated either a detailed or general euro transfer plan. The corresponding figure for the whole euro area was 63 per cent. After Finland, the best euro-prepared SMEs were found in Ireland, Luxembourg and Austria. Finland is the only Nordic country that will shift to the euro.

More than 90 per cent of Finnish SMEs have already assessed the effects of the euro on their information systems and informed personnel of the new currency. 95 per cent of SMEs will start systematic euro invoicing from 2002 or before. A corresponding survey one year ago showed that the euro preparedness of Finnish SMEs was one of the worst in the euro area. Then, only a third said they had a euro transfer plan. The change for the better is above all a fruit of an intensive euro information campaign: hundreds of euro conversion seminars and informative meetings, clarifying practical concerns and encouraging an early switch to the euro, were held in Finland last winter.

Good reasons for a slow shift

Though well-prepared for the euro, most Finnish companies still operate in Finnish markkas. According to the Commission survey, the share of euros in domestic invoicing of euro area companies at the beginning of the year was 23 per cent in value terms and 10 per cent in volume terms. In Finland, the respective figures were 10 and 3 per cent. Finland has also been slow to adopt the euro in foreign payments. In euro countries 43 per cent of foreign payments and 35 per cent of foreign payment transaction figures were denominated in euros, whereas the respective figures for Finland were about 10 per cent lower.

That Finnish companies have been slow to make the switch is often based on a good reason: there is no need to rush because current information systems can handle the transfer quickly and the necessary know-how is available. Also, the Finns are the least prone to make cash payments in the euro area.

Finland is the most expensive euro zone country

An OECD price survey indicates that Finland's price level for private consumption is the highest in the euro zone, whereas just two or three years ago Finnish prices were more or less on a par with those of Luxembourg, France and Germany. Starting next year there will be much room for realignment in Finnish prices, when euro cash is taken into use. Tougher competition implies downward pressure ­ not upward ­ on prices. A survey by the Finnish Consumer Agency found that the switch to the euro has had no influence on Finland's price level. Though some prices have been rounded downwards, and some upwards, the vast majority remain unchanged.

Has your company made a plan for the transfer to the euro?
% of respondents

A = detailed plan
B = general plan
C = total