At the same time, however, payments denominated in euros by UK firms to eurozone suppliers remained flat (at 6 percent). Instead, UK firms have increased their use of eurozone legacy currencies, with payments rising from 13 percent to 34 percent. According to KPMG Consulting, the reluctance of UK companies to make payments denominated in euros could indicate they are not yet ready to use the new currency. Leo Martin, director and the report’s author, said: “We would expect eurozone and UK companies to move at roughly the same speed in their replacement of legacy currency with euro-denominated transactions. But this survey shows a clear mismatch in balance of euro-denominated payments and income.” KPMG Consulting identifies several difficulties that UK companies may face as a result of this lack of preparedness. “Any UK company that deals with more than one eurozone country can simplify its systems and operations by switching to euros,” said Martin. “Using the euro also simplifies transactions throughout the supply chain by increasing transparency. Additionally, the conversion period for the replacement of legacy currencies by euros is ticking away. UK companies that use legacy currencies will need to convert their operations at some stage, and the longer they leave the process, the shorter the time they will have.” The firm’s survey also looks at the value of euro-denominated domestic transactions (transactions between two firms in the UK). The domestic eurocreep index stands at just 0.23 percent in Q2, but this figure is estimated by KPMG Consulting as equivalent to around £1.1bn of transactions.
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