Enlargement to boost German GDP, says institute

The enlargement of the EU on 1 May will boost German GDP growth over 2005 and 2006 by half a percentage point, according to the German economy institute (IW).

The Institute said west German firms in particular will benefit from greater trade with eastern European countries, while additional direct investment by German companies in the new EU member states will also boost growth.

The Institute warned that moving production capacity to the new cheaper EU member states to cut costs will not ensure business success and that to remain competitive German companies will have to continue to innovate their products.

Nearly one in three Germans have expressed opposition to the EU's enlargement in recent opinion polls, citing costs to the taxpayer, the loss of jobs to the accession countries, and cross-border crime.