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Business

Think Tank Predicts EU Expansion will Help German Economy

The German economy will profit from the imminent eastward enlargement of the EU, according to a survey by the German Economic Institute (IW) in Cologne. The industry-financed think tank expects the entry of 10 new member states into the EU to add half a percentage point to German growth in both 2005 and 2006. That prediction is in stark contrast to widespread fears that Germany will lose business due to competition from the lower wage countries joining the EU. The IW survey based its projections on an expected expansion of German companies' trade with the accession countries as well as additional direct investments of German businesses in the new EU member states, resulting in more efficient production. German direct investments in the accession states increased by a massive 430 percent to nearly €30 billion between 1995 and 2001. The adoption of EU law by these countries will make their regulatory framework even more reliable for foreign investors, the survey claimed.