Central and Eastern Europe

The Deutsche Bank Research Enlargement Monitor No. 9 states that the 10 countries lining up for membership of the European Union are economically well prepared, although the biggest candidate - Poland - is lagging behind the others.

Slovenia, the Czech Republic and Hungary are the front-runners according to the index, which is based on variables from economic growth and interest rates to market liberalisation and government borrowing. Poland, Lithuania and Latvia are at the rear end of the list.

The study views developments in Poland with concern, judging that the country's leaders missed the opportunity during past years of strong economic growth to cut spending, causing the Polish central bank to raise interest rates to ward off the risk of inflation. Growth has now fallen away.

The Bank's analysts have calculated that the candidate countries have converged economically with the current 15 member states to a degree comparable to Portugal and Spain before they joined in 1986. The admission of all 10 candidate countries will expand the EU economy by 4.5 per cent, but it will lower gross domestic product per head by 13 per cent.

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