Analytics, Business, EU – Baltic States, Financial Services, Markets and Companies

For more than two thirds of German companies in Estonia the euro introduction has had positive effects on their own business, only 6% had negative experiences. The biggest advantage seen by the respondents are simplified billing and accounting procedures. Also the reduction of transaction costs and the elimination of exchange-rate fluctuation risks are widely appreciated as positive outcomes of the currency changeover. Companies benefiting the most from the use of the single currency are mainly active in the wholesale and service sectors, informed BC AHK.

Another important effect is the increased confidence amongst foreign business partners in doing business with companies in Estonia: Every fifth respondent considers this the main advantage of the euro zone membership. „The euro introduction was a clear and important signal which further improved the investment climate. By eliminating uncertainty and increasing trust, the euro strengthens Estonia’s reputation as an attractive business location”, Thomas Schöllkopf, President of the German-Baltic Chamber of Commerce in Estonia, Latvia, Lithuania (AHK), comments on the results of the survey.

Changeover costs was the most mentioned negative aspect of the euro introduction in Estonia. The practical preparations and financial expenditures related to the currency switch were considered disadvantageous by nearly half of the respondents. While some companies expect an increasing price competition and higher production costs resulting from the accession to the euro zone, only a few predict higher labour costs. Even less companies are afraid of market share losses due to the entry of new market participants.

Positive spill-over effects on Latvia and Lithuania

The introduction of the euro has not only brought business advantages to German companies in Estonia but also to those active in the two other Baltic States. The number of respondents that recognized positive spill-over effects clearly outnumbered those who experienced disadvantages. More than 70 percent of the companies in Latvia and Lithuania responded that they were not affected at all.  

“All in all, the euro seems to have a positive effect on the business activities of German companies in the Baltic States. This is especially true for companies active in Estonia, but also those in Latvia and Lithuania have benefited from its introduction”, Maren Diale-Schellschmidt, CEO of the German Baltic Chamber of Commerce (AHK), observes after the first three months with the new currency in Estonia. The positive results also confirm the expectations from the 2010 survey. Back then 100 percent of German companies active in Estonia supported the introduction of the euro.

In Latvia and Lithuania currently three out of four respondents are in favour of replacing the respective national currencies with the euro – with the majority of companies in Latvia and Lithuania expecting the changeover not to happen earlier than 2014 or 2015.