Review enlargement special: Economic and social impact of enlargement for the European Union and France

The study examines the macroeconomic impact of the forthcoming enlargement on candidate countries and current EU Member States.

Enlargement will bring upheaval for the candidate countries, which will have to face direct competition from EU Member States. Moreover, the changeover to the European currency, currently in preparation, will tighten the constraints on their macroeconomic management of monetary policy and remove the option of using currency adjustments to face asymmetrical shocks.

However, the overall macroeconomic effects for the current Member States are likely to be limited due to the relative weight of the geographical areas. Enlargement will have a minimal impact on the EU except in the agricultural sector. As agricultural prices are generally higher in the EU, products from acceding countries will be more competitive in the short term when protection is reduced. In the longer term, competition in the agricultural sector will depend on the capacity of the Central and Eastern European countries to carry out structural reforms to encourage productivity gains.