Ernst & Young, one of the world's largest professional services firms, said it will merge its European partnerships and practices in 42 countries to form a single entity.

In response to increased competition for market share, the multinational accounting firms are opting to form larger blocs to survive. The move is the first merger by a Big Four firm- the others include PricewaterhouseCoopers, Deloitte Touche Tohmatsu and KPMG - since there are heavy cross country legal and regulatory restrictions which limit such partnerships.

The new unit will cover 87 countries in western and Eastern Europe, the Middle East, India and Africa into a new region to be known as EMEIA and will by headed by a management team with Mark Otty, the UK chairman. The new partnership will also be financially integrated and operate as one profit-sharing scheme.

All 3,300 partners in Ernst & Young will vote from next month and will be completed by July 1. If approved by, the EMEIA bloc will be worth $11.2billion and boast of personnel of 60,000 people.

Ernst & Young chairman Jim Turley said the integration reflected the increasingly global nature of the firm's borderless business environment.

The move is an important step towards resolving the difficult balancing act the major accountancy firms must maintain between national audit regulations and the global presence that their clients demand. It also brings concern that a major legal wrangle could impact the whole organization.

All countries within the Ernst & Young network already work closely, but this move will link them formally.