UK stores queue to take the euro

THAT bastion of tradition, Harrods, is among retailers allowing the unloved euro into the country by the back door. While Britain's politicians debate the merits of the pound against Europe's common currency and polls show a majority of Britons want to keep sterling, many stores have decided to let shoppers use both.

They want to encourage British consumers and euro-toting tourists to spend leftover change from their trips.

'UK retailers should take the euro,' said Peter Willasey, a spokesman for Harrods. 'We don't want to stand in the way of the consumer making a purchase. It's part of customer service.'

Greater acceptance in the UK of the currency already adopted by 12 European nations may help Prime Minister Tony Blair, who has said he wants Britain to join the euro. He faces growing opposition, with a September survey by Schroder Salomon Smith Barney and polling company MORI showing 57% of Britons oppose entry, up from 55% in June. 'The state of public opinion continues to present a major obstacle,' said Michael Saunders, an economist at Schroder Salomon Smith Barney in a note to investors earlier this month.

In Sweden, also outside the euro, clothing store Hennes & Mauritz and other retailers will have price tags with euros alongside kronor. The scenario will be repeated at restaurant chains such as Paul & Norbert.

'There will be an element of euro creep,' said Peter Williams, finance director at Selfridges, which will accept the currency at its London and Manchester stores. 'It could become the UK's secondary currency.'

Marks & Spencer, the UK's largest clothing retailer, will take euros at all its 300 or so stores. Debenhams, the second-largest British department-stores chain, will accept the single currency at its 96 outlets. They will handle conversions at the cash register, the way many stores already accept payment in foreign currencies.

The change starts on 1 January, when some 14.5bn banknotes and 50bn coins weighing 250,000 metric tons will enter circulation. Cash register technology is already in place for UK stores to easily accept the euro notes.

Harvey Nichols' registers can accept up to a dozen national currencies. 'It's just a matter of programming them to figure prices in euros,' said finance director Clive Morton. Change for euro payments will be given in sterling notes and coins.

Next is among the retailers that will not be accepting euros. Executives there, and at GKN, the country's largest car parts maker, have joined Business for Sterling, a lobby group opposing the euro. 'I don't think it will make any difference to the British consumer's view of the euro' that some UK stores will accept euro notes, said Dominic Cummings, director of Business for Sterling. 'It's just another foreign currency. People use US dollars in the UK now.'

Still, currency traders say the market is trading the pound as if it were the euro already. Sterling has fallen 2.4% against the dollar so far this year, compared with a 4.9% drop in the euro. The British currency has tracked the euro against the dollar 92% of the time this year compared with 58% in 1999, the euro's first year.

'There is a big divergence between the man or woman on the street and businesses in the UK about the euro,' said Sharda Dean, an economist at Merrill Lynch in London. 'Business tends to be more positive on the euro.'

But can it persuade the British people to change their minds?

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