Austria, Finland and Sweden joined the European Union on January 1.

The Union's territory grew by a third, its population by 6 per cent and its GDP by 7 per cent. Norway's voters rejected membership in a referendum in November.

Austria, being rich, will have to contribute some Sch30bn ($2.7bn) to the EU's coffers this year, aggravating a budget deficit of 5 per cent of GDP. About a third of the money comes back as adjustment payments to farmers because the Common Agricultural Policy takes immediate effect.

Consumers are the big winners, not only on food prices, but also on many service costs where protectionist walls must come down. The Austrian National Bank is joining the European Monetary System immediately and will probably join the Exchange Rate Mechanism in short order. The schilling is rigidly pegged to the D-mark, so these moves will have no noticeable effect.

Sweden and Finland, neutral Nordic neighbours which kept their distance from western Europe during the Cold War, step into the Union hoping membership will consolidate their recovery from deep recession.

Both will become net contributors to the budget; consumers should benefit from lower food prices as trade barriers fall, but Finland's highly subsidised farmers are braced for a painful adjustment to the EU's lower farm prices. Both countries are signing up for the EMS, but intend to float their currencies for the time being.

France took over the rotating six-month presidency of the European Union from Germany against the background of campaigning for domestic presidential elections due in May.

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