Sunday, July 8, 2012

Companies must join the eurozone debate

by Nick Butler

Financial Times

July 8, 2012

The corporate sector has been largely silent on the eurozone crisis.

For the past year the basic corporate assumption has been that the eurozone would muddle through. The crisis was seen as mainly hurting sectors such as finance and property in southern Europe.

But over recent weeks there has been a marked shift, caused by the absence of clear policy responses and the dawning awareness that Germany might not pay up.

Contingency planning has begun. Take the energy sector where at least three of Europe’s major companies have now started urgent work evaluating a break-up.

Multinationals are accustomed to multiple currencies and can absorb volatility. Whatever happens in the currency markets, energy will still be required by Europe’s 400m citizens.

But if the European Central Bank does not step in to monetise problematic debts, the prospect is that the old order could shatter. Companies will face massive uncertainty about currency values and politics. This will affect day-to-day trading, employment and investment.


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