For some, the European Union (EU) is an economic salvation that helps to protect any economic recession, while to others it is an economic disaster which is destroying national sovereignty. Despite the different opinions, it is a fact that European Union is one of the world’s largest economic communities which will have a big impact in the future economy.
In the future considerable growth in the size of the European Regional Policy Budget is a necessity if the EU is set to grow with the accommodation of the Visegrad countries of Eastern and Central Europe. These countries will automatically qualify as the poorest nations and objective 1 status under current structural funds arrangements (Baldwin 1994). Despite the benefits that arise of uniting with these countries (e.g. less chance of war) this will lead to the wealthier nations, like the UK, needing to considerably increase their contributions to the EU. Should the EU budget not increase then the introduction of these countries would still draw money away from the UK as they would contribute to bringing down the regional gross domestic product average of which the economic status of a region is determined. This could mean that poorest regions in the UK may not be eligible for objective 1 or even objective 2 status.
The influence of the Visegrad countries will lead to the formation of a larger regional economic association. More consumers mean a better allocation of resources, take advantage of economies of scale and improve EU’s competitiveness in world trade. The result is that there will be a better, stronger Europe. Nevertheless, there are some problems which associated with the enlargement policy. Firms may be attracted by the low labour and capital cost provided by Eastern Europe countries and therefore causes unemployment level in Western European to increase. Markets which are most at risk would be the ones where EU has traditionally imposed high tariffs to protect the domestic industries.
Although there are a lot of potential future members of the EU from Eastern and Southern Europe, these countries have a low GNP and distribute a lot of money in the agricultural workforce. If these countries do join EU, then additional financial pressure will be placed on those existing members. Germany, France, Italy, Spain and UK have a combined total of 75% of the EU’s GDP. Some countries such as Greece and Portugal may be reluctant to see new members entering the EU because this may reduce the amount of EU funds available to them. Some people thought that it will be quite unrealistic to enlarge the EU further because it will not be easy to operate as opinions will differ on whether to increase the budget or allow the relatively poor areas of western Europe be without any significant contributions.
Controlling the EU budget is the prime factor in running the EU. It is hard to decide what the money should spend on and gain agreements between all the countries. At present, there are approximately 90 different financial aid programmes and 83% of its total expenditure is already distributed to Agricultural and regional sectors.
According to the financial times, the EU has decided to take a this step and it aims for a “big bang” expansion from 15 members to 25 by 2004. However, I think this “Big Bang” expansion may cause a lot of conflicts not favouring the UK economically and politically. Negotiations for an agreed solution between all these countries will be difficult, and the UK will now only become one voice in twenty five. Each country will have different priorities in terms of the economy, different economic infrastructure, position and situation. Appropriate decisions are necessary to adjust and improve each country’s own situation and is therefore hard to make all the members agree on a single policy that can satisfy all the member countries. Further investigations can be carried out through researching the different institutions responsible for the organization and enlargement of EU such as the Council of the EU, European Commission, European Central Bank, European Parliament, etc. This will allow a deeper insight into how the EU organizes and faces the existing problems. Investigating each member country’s EU department would allow different perspectives to be viewed on how they may deal with the arising situations. Surveys, research of arguments and opinions are necessary to analyse whether EU growth will be favourable for the economy. Careful considerations are required as it will affect the whole UK and its economy.
