Costs and Benefits of EU Eastern Enlargement for Austria

The Agenda 2000 of the European Commission and the state of play in negotiations imply that the current candidate countries are going to join the Union in two consecutive groups. This is why simulations for the 2002 to 2010 period, using WIFO's macroeconometric model, assume that the first group of 5 CEECs will accede in 2002 and the other 5 CEECs in 2007. In all, eastward enlargement of the EU is likely to have a positive effect on almost all aggregates of the Austrian economy in the medium and longer term. By 2010, real GDP is projected to be 1.3 percent higher than in a scenario without eastern enlargement. Also, employment figures are expected to rise by around 27, 000 workers. The price level would be almost 1 percent lower, and new borrowings of the government would be down 0.4 percent of GDP.