This is of course already a hot issue in the UK, where the rewards to directors of privatised companies have drawn great criticism. Expect it to become a much hotter issue on the Continent, where the culture of accountability to shareholders is even less secure than here.In the case of Germany, mass privatisation may even be the driving force which reduces the influence of the banking system over the securities market, reversing a relationship which dates back to the 1930s when the banks acquired their large equity stakes.Perhaps even more important than these pan-European changes, is the impact of privatisation on the non-OECD countries - the sixth factor. Privatisation of pensions and privatisation of industry move hand in hand.The fifth effect is to do with the fact that we are going to hear not just much more about regulation of privatised corporations, but also about their corporate governance. (French privatisation issues have already fared badly, which has put a damper on the country's further plans.) On the other hand, the share issues seem likely to stimulate tax and regulatory changes that will encourage the growth of an equity culture in Continental financial centres.The fourth effect, leading on from this, is the supply of additional equity securities neatly matching the need for Continental Europe to build its private sector pensions industry - which will need to acquire equity securities to match these pension liabilities.Just this week the German government unveiled more details of its planned reform of securities legislation allowing insurance companies to invest more of their funds in the stock market to boost the use of unit trusts. On the one hand, this will put pressure on the markets because absorbing the new stock will be difficult, particularly if the generally solid share price performance of the past three years is superseded by more nervous, difficult markets. But it is cumulative and it gives those countries a fiscal freedom thatwe will not have. And, over the next decade, Continental European governments will have the option of cutting their deficits by pushing up the pace of privatisation - whereas the UK can only cut its fiscal deficit the hard way, by increasing taxes or cutting real spending.Third, Continental European capital markets will continue to be transformed by waves of new share issues.

In very crude terms, the governments of Germany, France and Italy will continue raising pounds 4bn or more each year from privatisation, while the UK will not be able to do so That may not sound large in overall fiscal numbers. As these corporations are privatised (and, as important, subjected to market disciplines) their performance will improve.So the efficiency of the Continental European economy as a whole will benefit. In the long term that will increase pan-European prosperity, and of course should be welcomed. But in the short term it means that the advantage enjoyed by companies such as British Airways will be narrowed.Second, there will be a loss of comparative fiscal advantage experienced by the UK.