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U.S. execs sceptical of euro

The euro has yet to produce the expected flood of investment from the United States  

By CNN's Maggie Lake

NEW YORK (CNN) -- The introduction of the single currency in 1999 was expected to unleash a flood of American investment in Europe.

Freed from having to convert dollars through 12 different currencies, U.S. corporations would be able to treat Europe as a unified trading block -- or at least that was the theory.

But that hasn't happened.

"I think we still have quite a lot of differences in terms of languages, in terms of some regulations," says John Downe of IBM. "So to see it as a single market would be a false view at this stage."

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Differences and difficulties in the labour market throughout Europe have much more influence on U.S. investment decisions than does the currency.

Analysts say strikes like those that paralyzed air travel in France recently are a much bigger concern to American executives than the euro.

"Until Europe can really grapple with and open their labor markets, make them flexible, have a flexible workforce that will move from one country to the next, where there is new employment, new investment opportunity ... the euro is only taking care of some of the smaller issues of doing business in Europe," says David Gilmore of Foreign Exchange Analytics.

Many U.S. executives say for the euro to flourish, Europe needs a united voice on corporate taxation and social policy -- not just on monetary policy.

But for now, the fact that there is a single currency does offer some benefits.

"What it does do is open up some opportunities for organizations to address that marketplace through things like e-business," says Downe.

"The fact that everybody is using the same currency obviously is a simplification, and all organisations should be looking at the opportunities and indeed the threats that working in that wide, more competitive, marketplace brings."

The eurozone remains a vital market for American corporations -- especially for technology and software companies looking to expand market share.

But executives are not making strategic decisions based on the euro. In fact many still view it with a somewhat sceptical eye -- a currency they'll live with, but not one they love.




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