The report titled Trade and Investment Implications of EU Enlargement lays out the benefits as well threats from Saturday’s expansion.
For the UK in particular, the report forecasts the ascension will mean an increase in GDP by £1.75 billion per annum; further growth in export and investment opportunities for UK companies, such as bidding for infrastructure projects; and states that trade growth-rates with the ten new member states is greater than growth from trade with the rest of world - as income levels increase in these countries, UK exports can grow with demand and local purchasing power levels.
Hewitt said that the EU is the largest single market in the world and offers opportunities for UK businesses. “When the EU expanded, there were fears about jobs and the economy for existing members which never materialised. I believe similar concerns this time will prove equally unfounded.
“The report makes clear, enlargement also means the removal of remaining trade barriers and new member states will have to comply with EU standards making them a more attractive environment for UK firms looking to trade and invest.”
The majority of the new members have systems in place to attract investors, have low levels of regulation as well as educated and skilled workforces.
“Most of the new member states have spent the last ten years rapidly liberalising their economies; their arrival should provide impetus for the rest of the EU in the process of economic reform.”
The government report states that UK companies are concerned about losing market share with the expansion, to cheaply produced goods. However, an over abundance of cheap imports is unlikely as the EU10 countries already have tariff-free access to EU markets in most sectors and subsidies will be limited. The trade secretary urges UK businesses to concentrate on maximising their productivity and higher value-added activities rather competing on labour costs alone.
The report is available on www.dti.gov.uk.
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