That was the thought of PricewaterhouseCoopers forest and paper practice leader for Sweden, Robert Barnden.

"The EU enlargement will probably increase the trend of continuing consolidation in the industry," he said.

Barnden said it was likely that the major Nordic firms would increase their capital expenditure in the new EU member states.

He added that this would take the form of development in greenfield sites, as well as modernising existing pulp and paper plants.

"The exposure of the accession countries to increased demands for rationalisation will probably see the closure of many pulp and paper mills, which are often outdated and small," said Barnden.

However, the paper sectors in the 10 new EU member states will not be starting from a small base, according to Barnden. He said it was worth remembering that many of these countries had benefited from big investments in recent years.

These had been largely Western European capital, which had been invested to drive rationalisation and increase capacity in Eastern Europe.

Barnden said he was of the opinion that the increase in wage levels and living standards in the 10 accession countries would lead to a rise in demand for the pulp and pulp output of those countries.

"At present, it is difficult to predict where new investment will take place and what effect this will have on Scandinavia," he said.

Higher outgoings, including energy and labour costs, in Scandinavia will have an impact on any new investment decisions.

"However, other factors, including proximity to mature markets, high-quality labour force and customer proximity, must also be taken into account," said Barnden.

Story by Andy Scott