Fri, Dec 08, 2017 - Page 9 News List

Anti-euro movement triggers backlash from EU businesses

Companies worried about rising nationalism call for euro entry, after leaders in Poland, the Czech Republic and Hungary denounce the single currency

By James Gomez, Konrad Krasuski and Krystof Chamonikolas  /  Bloomberg

Beyond that, though, is the virulent isolationism and anti-immigrant sentiment that has swept through parts of the EU’s east.

Two out of every 10 Czechs favor joining the euro, while only a third say being an EU member is a “good thing,” according to Eurobarometer surveys this year.

That is worse than how Britons feel about the bloc.

While the EU itself remains popular in Hungary and Poland, only 43 percent of Poles want to adopt the euro. Almost six out of every 10 Hungarians favor a switch away from the forint.

If Brexit showed business leaders anything, it is that their interests can quickly be sidelined when emotions run high over issues like migration and, in Poland and Hungary, rule of law.

In June, the EU launched legal proceedings against the three states for refusing to accept refugees. Poland’s ruling Law and Justice party is at loggerheads with the EU over its push to bring courts and state media under more direct government control.

“Euro adoption is so demonized right now that it’s hard to expect a move,” said Marcin Czyczerski, chief financial officer of Poland’s biggest shoemaker, CCC SA, which has a lot of customers in Europe and even pays for rents at home in the single currency.

Czyczerski and other executives want the euro to mitigate currency risks that are inevitable when a lot of operational costs are in local currencies and revenue in euros.

They are also faced with losing competitiveness to neighbors along the eastern front — namely Slovakia, Slovenia, Lithuania, Estonia and Latvia — that have already switched. Popular approval ratings for the common currency are around 75 percent in these places.

“If Babis was solely a businessman, he’d be on the side of supporting the euro,” said Milan Pasmik, chairman of McCarter AS, a Slovak company that sells its high-end fitness drinks across central Europe and invoices suppliers and buyers in Hungary and Poland in the single currency.

“People who usually talk like that don’t have companies to run. It’s politics,” he said.

Some executives say politicians are more willing to join the euro than they would like to let on.

When push comes to shove, Hungary will not be left out of deeper integration, according to Sandor Csanyi, the country’s richest man and chief executive officer of its biggest lender, OTP Bank.

Businesses have been quietly preparing for that to happen. Czech companies more than doubled the use of the single currency to pay local suppliers in the past five years to 18 percent, central bank data show. Most big property deals in Poland are already done in euros.

“We’ve already had to learn to live with it; we’ve already been preparing our accounts in euros for years,’’ said Barna Erdelyi, chief financial officer of Hungarian truck operator Waberer’s International Nyrt.

Apart from the economic rationale, Spicar said refusing to join the “exclusive eurozone club” when the Czech Republic sends 84 percent of exports to the EU would be a costly mistake politically, too.

“A new core seems to be crystallizing within the EU of countries that are more willing to further integrate, that are more active and less euroskeptic,” he said. “We need to keep careful watch and make sure we don’t miss the train.”

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