Danes assured short-term price of EU enlargement will pay off

Date: 08/02/1996

By Ole Ryborg

ENLARGEMENT will be costly, but the overall benefits to be gained from letting up to ten more countries into the EU make it a price worth paying, according to a new Danish government report.

The report by Copenhagen's ministry of economic affairs says enlargement would cost Danish taxpayers an extra half a billion ecu a year and would result in

up to 17,000 job losses in the short term.

But it insists that, overall, enlargement would have a “positive” impact on the Danish economy.

The in-depth study on the possible financial implications of enlargement for Denmark is one of the first to be carried out by a national administration. Previous studies have tended to focus on the consequences of enlargement for the EU as a whole.

The report says enlargement will probably mean an increase in the Union's overall budget of between 25 and 40&percent;, necessitating a half-a-billion-ecu rise in Denmark's contribution.

It also forecasts that between 13,500 and 17,000 jobs could be lost in certain sensitive sectors of industry - such as textiles, clothing, iron and steel, and agriculture.

But the report predicts that these job losses will be offset by the creation of new jobs as the internal market expands to include millions of consumers from the Central and Eastern European countries (CEECs) and trade increases, boosting economic growth.

Its forecasts suggest that trade between the EU and the CEECs could rise by 8 to 12&percent; annually in real terms “over a number of years”.

Much depends, however, on the ability of Danish industry to adapt to the new climate. “The magnitude of the benefits for Denmark will depend on the ability of the Danish economy to adjust to the changed environment in the enlarged internal market,” concludes the report.

Economics Minister Marianne Jelved insists that, overall, enlargement will not mean a rise in unemployment, predicting that the transition period before the CEECs become full members of the EU will give industry sufficient time to upgrade skills and retrain workers in sensitive sectors so they can move into those areas most likely to get a boost from enlargement.