Hearing one hand clapping

Matthew Lynn

The accession of eight new EU members will force a change in tax rates as companies and their tax revenues threaten to drain into Eastern Europe

It is now only about three months until eight Eastern European countries, including Poland, Hungary and the Czech Republic, become members of the EU. Most attention has focused on how Eastern European workers may migrate to the more prosperous western half of the Continent. And how companies will increasingly shift their factories to the East as they seek out cheaper workers. Less attention has been paid to what may turn out to be the most significant consequence of the EU's enlargement - tax revenue draining out of Western Europe as companies move East. Yet tax rates may be enlargement's...