The Financial and Budgetary Impact of Enlargement and Accession

The financial arrangements for the accession of 10 new member states made at the Copenhagen European Council in December 2002 and confirmed in the Accession Treaty signed in Athens in April 2003 will pose significant financial problems for these countries in the short-term. These result from the cumulation of contributions to own resources, pre- and co-financing of EU programmes and the implementation of the acquis communautaire as well as the slow absorption capacity of these countries. In the longer term they will help to underpin more rapid growth through the support that they will provide to infrastructure development. Long-term positive effects will only be realised, however, if domestic policy in these countries adapts to the receipt of large unrequited transfers. The European Union objective of keeping tight control of financial transfers was achieved through a refusal to negotiate reductions in contributions to own resources on the one hand and adherence to the Berlin financial framework on the other. The candidate countries were unable to break down this defence, partly because of their unwillingness to co-operate in the negotiations. However, the difficult fiscal situation of several EU member states with respect to the Maastricht EMU conditions was a strong constraint on generosity.