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MLIM says EU expansion is bringing corporate boost in France and Germany

Merrill Lynch Investment Managers says EU expansion is having a positive impact on corporate restructuring in France and Germany.

Cheaper labour and lower levels of corporation tax in the new EU states have helped to push down costs in mainland Europe and make them ideal investment targets.

MLIM says wage costs have been pushed down in Germany, most notably, bec-ause of a shift in employer/ employee relations.

The firm says employees within core Europe nations have become less demanding of employers as they fear potential job losses through the relocation of jobs to Eastern European countries where labour and operational costs are much cheaper.

Another factor adding to the competitive environment is the average rate of corporate tax in the 10 accession countries which is about 21 per cent compared with 31 per cent in core countries.

European equity team member Wolfram Roddewig says: “Substantial complications remain with expansion in the short term but the arr-ival of these nations is encouraging corporate reform. Substantial investment opportunities exist in the continental Europe equity market.”

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