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European Economic and Monetary Union (EMU) could create a price and wage squeeze, reducing margins by forcing prices down and encouraging labour costs to rise, according to KPMG Management Consulting. Speaking at a conference on EMU organised by the Institute of Economic Affairs in Brussels in December, Michael Littlechild, partner with KPMG Management Consulting, warned that, unless companies have comprehensive price and wage strategies in place, they could find their margins under severe pressure once the single currency is introduced.
'Recent research undertaken by KPMG shows that almost half of Europe's largest companies believe that prices will fall as a result of EMU. In addition, 27% believe that wages will rise. This is twice the number of those who think that wages will fall and demonstrates that companies suffering loss of revenue from price cuts will not necessarily be able to recoup their losses by keeping wages down. KPMG believes that...