tag:blogger.com,1999:blog-4411161795798360588.post5201288525064481899..comments2024-03-26T09:38:39.888+00:00Comments on Borthlas: Internalising problemsJohn Dixonhttp://www.blogger.com/profile/07447224248021209852noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-4411161795798360588.post-86677861338646484342010-02-16T09:25:59.359+00:002010-02-16T09:25:59.359+00:00"Your point about Greece has nothing to do wi...<i>"Your point about Greece has nothing to do with the EuroZone or the 'size' of their economy."</i><br /><br />I agree - size is not the issue, and I certainly didn't intend to suggest that it is. But there is a question about how to deal with a situation where a currency / interest rate regime set for a large area doesn't always meet the immediate short term needs of part of the area, and it was more that aspect that I was driving at.John Dixonhttps://www.blogger.com/profile/07447224248021209852noreply@blogger.comtag:blogger.com,1999:blog-4411161795798360588.post-27307173363065925992010-02-14T17:09:37.381+00:002010-02-14T17:09:37.381+00:00Ten years ago while I was working for a major Japa...Ten years ago while I was working for a major Japanese multinational in a London based European HQ. I was required to make the necessary adjustments to the banking and finance systems for all the European subsidiaries, including that of the UK. It became clear that there was significant savings to be made to the business with no need to offset risk on exchange from all the EuroZone subsidiaries and also a major reduction in bank charges. Commercial banks from all corners of the EuroZone where knocking on the door to bid for the requirement as it was possible to implement a single facility at one bank, in one country, and more importantly run a consolidated purchase ledger and payment mechanism for all suppliers with the EuroZone. <br /><br />Then came a 'what if' moment.<br /><br />A quick examination of the top 100 suppliers in the UK identified that almost all of them were international in nature and would inevitably be performing the same operation. In fact, in order to extinguish liability to us (in London) they were converting Euro's to Stirling to effect payment, so that we could accept Stirling and we subsequently coverted it back to Euro, the main operational currency of the European group. A prompt email was sent to all of these suppliers in the UK offering to conduct all further transactions in Euro. The response was overwhelming, and soon over 80% of the UK purchase ledger, by value, was being conducted in Euro. A further analysis of these suppliers found that the propensity to business in Euro was different across the UK. Top of the list was London, which would be expected as many corporate HQs were located there. Surprisingly, the second region to be most 'Euro-friendly' was Scotland, closely followed in third place by Wales.<br /><br />If you trade in money (financial services) it pays to control your own risk and means of exchange, however, if you deal in a real commodity, whether manufactured goods or services for businesses that do, the currency used is merely a measure of a transaction. Your point about Greece has nothing to do with the EuroZone or the 'size' of their economy. As the result of my 'what if' moment was to immediatly eliminate Greece and Italy as a location in which to conduct the EuroZone activity due to the lack of technology and skills to perform the requirement. A Greek Euro has the same value as a German Euro. The contract eventually went to a German bank running a clearing unit in Ireland, which was also best able to service the UK.<br /><br />Is Wales missing out on something here ?<br /><br />I also wish to point out that my personal income for providing this work in London for a 10 year period was more than I have earned in Wales before or since. It will be considered in your other discussion threads as the London subsidy to the Barnett formula. It was tax paid in London by a Welsh educated Welshman who had to migrate to do this work of this nature at the time. They still accept Euros at the Severn bridge, but not cards !Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4411161795798360588.post-16738872712422837462010-02-12T08:43:44.253+00:002010-02-12T08:43:44.253+00:00independence would be good for Wales at it would f...independence would be good for Wales at it would force our political class and those who vote for them (i.e us!) to engage in grown'up politics and not hark back to Tatcher and the begging bowl. I´m in the Basque COuntry and one reason for their economic success is that the taxes raised here are spent here and then passed on to Madrid. This leads to an honest assessment of what needs to be prioritiesed with the money raised and also, more importantly, the importance of raising that money yourself. <br /><br />It´s fiscal responsibility. It´s something Plaid and the Tories, at least, should agree on.<br /><br />SionAnonymousnoreply@blogger.com