【正文】 r capita [USD] EU 25 vs. US vs. Asia: Enlarged EU is a still powerful, but the slowest growing economic region in the world 3. Opportunity: Ten new states give the EU momentum to increase growth ECONOMIC POWER [GDP, USD bn] Comparative indicators 2023 POPULATION [m] WEALTH [GDP per capita, USD] GROWTH [avg. GDP growth 19992023, %] 10,988 290 11,028 455 US EU 25 ASIA* * Aggregated data for Japan, China, ASEAN 8,458 1,947 37,890 24,237 12,058 B. Challenges and opportunities of enlargement for EU 15 Eastward enlargement entails threats and opportunities for economies, panies, and governments Economies – Unit labor cost advantages in EU 10 challenge existing value creation structures in EU 15, but also offer momentum for structural change / innovation in EU 15 Companies – Competition in EU 15 as well as in EU 10 is increasing, but also new sales, investment, growth and relocation opportunities for EU 15 panies in Eastern Europe Governments – Existing institutional setups in EU 15 are challenged by lower taxes / contributions and higher flexibility in EU 10, but also momentum for political change Effects of enlargement on macroeconomic and microeconomic levels Macroeconomic threats: Pressure on EU 15 labor markets and petition for best institutional setup Low wagepetition / unemployment threats – Migration (up to m people from CEE will move to the EU 15) – Offshoring (. 830,000 people in CEE employed by German firms in 2023) Low tax / social contributions petition – Also: Less regulation (. IMD bureaucracy index: Estonia ranked 9th, UK ranked 33rd) Financial burden (EU budget) – Cost of enlargement (20232023): 49 bn EUR Differences: Countries with high degree of regulation, geographical proximity to CEE and contributors to EU budget are more affected 39,0 19,0 15,0 0,0 17,4 15,0 8,5 12,5 GER POL LIT EST Taxes Contributions CORPORATE TAXES [%] / SOCIAL CONTRIBUTIONS 2023 [% of GDP] Macroeconomic opportunities: Higher growth momentum for structural / institutional change and innovation Enhanced growth in east and west – EU 15 benefits from backlog of demand in CEE – New momentum in 39。New Europe39。 through increased trade / knowhow Momentum for structural change / innovation – Laborintensive / low value creation industries/ products no longer petitive in EU 15 – Structural change towards hightech goods and services the only choice for 39。Old Europe39。 ( growth / wealth) Momentum for institutional change – Regulations, taxes, subsidies, flexible markets EU enlargement helps policymakers bring about necessary but often unpopular structural reforms in their respective countries CEE 8 + . 202309 EU 15 + cum. 202309 Source: EU Commission IMPACT OF 2023 ENLARGEMENT ON GDP GROWTH [%] Microeconomic threats: Increasing petition for EU 15 due to lower labor / unit costs in Eastern Europe Differences: Mature industries more affected than innovative ones, border regions more than western, small panies more than large Chemi cals Medical techno logy IT equip ment Auto motive Steel industry Wood Industries with parative ADVANTAGE in GER Industries with parative DISADVANTAGE in GER More attractive business conditions in CEE – Labor costs only between % (Slovakia) and % (Hungary) of EU 15 level – Taxes lower and social contributions only between % (Poland) and % (Czech Republic) of German level – Capital costs about 20% lower – because of lower investment needs due to flexible labor markets Need for – Industry restructuring – Innovation (creative destruction) REVEALED COMPARATIVE ADVANTAGE–GERMANY VS. EASTERN EUROPE [Index]