New members of the EU have had an enormous psychological impact on the attitudes of German workers and companies. Between 1980 and 1992 real German labour costs per unit of output rose by 42%. Germany started restructuring later than the UK and US but has recently been catching up and has done much more than some other European countries. The fall and rise of German competitiveness may be clear from export data but the impact on the share prices of certain German companies has been even more dramatic. Equity investors are now highly sensitive to any signs that a previously moribund company is set to initiate restructuring.
