UK firms shun exodus to eastern Europe

The predicted relocation of British businesses to eastern Europe following the expansion of the European Union has failed to materialise, a business group said today.

The UK's Institute of Directors (IoD) said only 13% of company bosses said they had considered shutting down their UK operations and moving business activities to one of the 10 new member states.

At the same time, 80% of companies said they had no intention of outsourcing any of their operations, despite the lower cost of operating in eastern Europe.

James Walsh, head of European and regulatory affairs at the IoD, said: “Although there have been some high-profile examples of companies switching production to the new member states, our survey suggests that these cases are the exception rather than the rule.

“Britain remains a good place to do business, but there is no room for complacency.”

However, the research found that British businesses were keen to trade with the new EU members, with 35% already doing business with firms in these countries, particularly those in Poland, Hungary and the Czech Republic.

Firms also expressed concerns about red tape, with nearly 70% concerned that the recent expansion of the EU would lead to increased business regulation.

Estonia, Lithuania, Latvia, Poland, the Czech Republic, the Slovak Republic, Hungary, Slovenia, Malta and Cyprus all joined the EU in May this year.