The European Commission has concluded that in the ten countries that will become EU members in three months, prices are too low and therefore need to be leveled. As Gazeta.Ru writes, currently prices for goods and services in the ten future EU countries are on average about half as high as in its 15 current members. European Commission experts note that this was also the case during previous EU enlargements, but prices gradually leveled out afterwards. Let us recall that among the current newcomer countries, almost all are tourist destinations, and accordingly, EU decisions directly affect tourists' wallets.
It is already clear that prices level out in a peculiar way upon joining the EU. Prices do not decrease in more developed countries nor increase in new entrants; they simply rise in the latter to the level of the former, i.e., the pan-European level. So it is not at all like water levels in communicating vessels. When Portugal and Spain joined the EU in 1985, their prices were respectively 60% and 70% of the level in the other community countries. Now the gap between Union members and the ten candidates is even larger.
Only Malta and Cyprus approach the rest of Europe - here prices overall are 87% and 82% of EU prices, respectively. Slovenia is already significantly cheaper (66% of the EU level). Poland and Latvia are almost twice as cheap as future partners in the common market (55% and 54%), while Lithuania, Estonia, the Czech Republic, and Hungary are more than twice as cheap (46-47%). Slovakia remains the cheapest of the candidate countries so far.
Prices will level out specifically upward for economic and political reasons. "When the ten countries become EU members, many of their costs will be reduced - border crossings, human capital (for Poles, for example, it will be easier to work in Britain), etc. - and eventually these countries will begin to catch up with Western Europe in terms of economic development. This means that consumer demand for many types of goods will grow, wages and the overall standard of living will rise, and this cannot but cause prices to increase," explains Anton Struchenevsky, an economist at the Russian investment company Troika Dialog. In addition, these countries will not immediately switch to the euro, but will strive to do so. The transition to the euro will also eliminate currency barriers, which will only accelerate the integration process of the ten new countries.
Theoretically, prices in the uniting countries should indeed level out, that is, rise slightly in the candidate countries and fall slightly in the rest of Europe. "But the ratio of economies is too different," notes Yulia Tseplyaeva, head of the research department at ING Bank. "If we take nine expensive apples and put one cheap one next to them, it too will become expensive."
Secondly, it is not in the EU's own interests for prices in the new countries to be lower - otherwise demand will begin to flow there and the newcomers will get all the cream. Therefore, the EU will insist on artificially inflating prices, Yulia Tseplyaeva is convinced.
There are many mechanisms to force prices to rise. Some countries have already begun active measures. For example, the Czech Republic raised the value-added tax on communication services, alcohol, and tobacco products from 5% to 22%. At the same time, one must give the Czechs credit: they almost immediately announced improvements to the visa issuance system - promising that after its introduction, the speed of obtaining a Czech visa will increase.
Tourist firms are completely displeased with the upcoming price changes in Eastern Europe, the Baltics, and the Mediterranean islands. As Irina Tyurina, a representative of the Russian Union of Tourism Industry, comments, tour operators expect a 30-40% decrease in tourist flow after the ten countries join the EU. "This always happens when radical changes occur to favorite vacation spots," she notes. For example, when Bulgaria introduced visas, our compatriots practically stopped going there; the same happened with Finland when the country joined the eurozone and prices rose significantly.
Only love, according to Irina Tyurina, can save the tourism business from falling demand. After joining the EU, some countries that are not particularly popular even now, such as Slovakia and Slovenia, will completely lose tourists; others - the Czech Republic and Cyprus - will still be visited later. "For our compatriots, travel has become a physiological need, so they will not abandon their favorite resorts no matter how expensive they become," Irina Tyurina is sure. Still, those tourists for whom an extra 50 euros is already a problem, the new EU members may lose forever.
At first, there may be a decrease in tourist flow, but overall everything depends on the work of these countries' visa services. If the cost of visas increases, it could negatively affect tourists' desire to visit Eastern European countries. As for the increase in prices for goods and services in future EU members, it will have a slight impact on tourist flow. Despite the fact that prices for communications, alcohol, and tobacco products have already risen in the Czech Republic, tourists have not stopped going there.
Financial experts clarify that different Eastern European countries will have different amounts of time to catch up with the EU in terms of price levels. For developed ones - Poland, the Czech Republic, Hungary - two or three years; for less developed ones - Slovenia and Slovakia - four to five years. So it is better to visit Prague, Warsaw, and Budapest now - soon it will become noticeably more expensive.