Companies exposed to euro must prepare for worst: PwC
Northern Ireland firms who export to Europe must prepare themselves for every eventuality in the eurozone debt crisis, it has been claimed.
Business advisory firm PricewaterhouseCoopers (PwC) said that while most companies were "acutely" aware of eurozone problems, few were actively investigating how the possible outcomes could affect them.
Even those who export only to the Republic need to be prepared for what might happen, such as some countries leaving the euro, which would result in firms having to make changes to their systems to deal in multiple currencies.
Dr Esmond Birnie, PwC's chief economist in Northern Ireland, said the uncertainty in Europe was bad for exports, investment and recovery.
"However, while the rolling eurozone crisis has become something of a spectator activity, too few companies are focused on how the various outcomes could impact on their business.
"Even those operating in the Republic of Ireland may not be immune from any eurozone fallout."
Kevin MacAllister, PwC's private business leader in Belfast, said: "A continuation of the current problems is likely to see volatility with the euro against other major currencies, with capital flows to perceived safe havens such as sterling.
"However, companies trading in the eurozone should be calculating how currency fluctuation could impact on their revenues, cash flow and profitability.
"If one or more countries leave the eurozone, their banking system could be temporarily closed to transactions, emerging currencies devalued and this could even impact on local companies' IT systems if they are not configured to deal in multiple currencies.
"We strongly urge companies operating in the eurozone - whether exporters or those with a European supply-chain - to evaluate how the various outcomes to the crisis could impact on them and to prepare accordingly."
While the long-term view was uncertain, PwC said that in the short-term, eurozone countries would continue to tighten spending, particularly where there was severe sovereign debt.
PwC predicted that would increase pressure on jobs and even result in a cut in the minimum wage in some states.
A survey by the firm found 40% of global business leaders thought the eurozone crisis would come to a head this year.
Number of business chiefs who say crisis will come to a head in 2012