Don’t Wait for Greece

Companies need to start planning now for possible exits from the euro.

Only a few months ago, most analysts were saying that the eurozone debt crisis was easing. Greece had accepted an austerity plan in return for bailout funds, Italy and Spain had conservative governments that promised to put their financial houses in order, and the euro was holding firm. Then came the Greek elections, where voters, fed up with austerity, rejected both major parties and France’s election of Socialist Francois Hollande, who vowed to combat the German-led policy of financial austerity.

Suddenly, it seems quite possible that Greece will exit the euro. Spain, Portugal and Italy could be in trouble as well, maybe even to the point of quitting the euro.

“Regardless of what happens, companies can and should be thinking about how they would deal with currency controls, about their suppliers, about how a devaluation would affect reported profits from European sales, and about investment decisions on where to source and where to sell,” Venktr says.

Among the steps PwC suggests: Moving cash out of euros into safer currencies; negotiating shorter supply contracts in the eurozone; setting cash aside for bond repayments; increasing cash reserves; and assessing net euro exposure.

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