The first EU eastern enlargement: impacts on the German economy and public perceptions

The first round of EU Eastern Enlargement was completed with the accession of 10 Central Eastern European countries on May 1, 2004. This economic integration will have impacts on the economies of the accession countries and the EU 15. Public perceptions of Eastern Enlargement have not been very promising in Germany, but as it has the closest economic ties with the new members and is the biggest net contributor to the EU budget, it is widely expected to face the strongest impacts of any of the EU 15. On the one hand, there will be fiscal costs to bear, and on the other, there will be effects on FDI, trade, economic growth and general welfare, and significantly, some potential East–West migration. These effects will be felt on labour markets and in the welfare system in Germany, bringing benefits to some groups and costs to others. This paper presents some estimates of these effects and their impacts on the German economy, with closer attention being paid to certain crucial regions directly bordering the Central Eastern European countries.