There has been a general malaise within the EU from having to face up to the competition of a globalised economy, most recently exemplified by the controversy surrounding cheap imports of Chinese textiles. Along similar lines to the debate on the services directive, the enlarged EU has been debating the appropriate level of business taxation. With a markedly lower average than EU-15, some of the new member states have been accused of 'tax dumping'. Populistic ideas of cutting access to EU structural funds to countries with the lowest tax levels have been aired by leading French politicians such as Nicolas Sarkozy, adding weight to a sense of 'us and them' within the EU.
The difficult talks on the next EU budget covering 2007-2013, which is set to be concluded by June 2005, pits the hitherto biggest cohesion and structural fund recipients such as Spain, Portugal and Greece against new member states with greater needs. In the past, EU budget talks that have got bogged down have traditionally been solved by Germany pulling out its wallet and paying more into the pot. However, this cannot be expected to emerge as the way out this time around. Germany is not only more self-confident, but also economically weaker.
Fears of a large-scale influx of cheap labour from the new member states to EU-15 has been avoided, in part due to the restrictions put in place by a majority of EU-15 states to avoid just that. Only Ireland, UK and Sweden have not put up restrictions. However, the absence of one of 'the four freedoms' of Europe has left the new member states with the feeling of being less than fully-fledged members. This perception is all the stronger given that the new member states are not yet members of Schengen nor of the Euro.
In spite of few specific examples, the fear of industries from the EU-15 moving their business to the new member states in search of cheaper wages and lower production costs has also added to negative public sentiment towards the EU-10 in parts of the EU-15.



