WIf the European Union were to dissolve, gross domestic product (GDP) per capita in Germany would fall by 5.2 percent. This is the result of a study carried out at the Munich Ifo Institute. The authors around the head of the Vienna WIFO Institute, Gabriel Felbermayr, also explain that the loss of prosperity in the large “southern” economies of Italy and France was lowest at 4.1 percent, in small countries that were particularly strong relative to their own economic output depend on exchanges with other countries, it would be particularly large. GDP per capita would fall the most in Malta (minus 19.4 percent), with double-digit losses in Luxembourg, Estonia, Slovakia, Hungary and Belgium.
If one also takes into account the transfers from the community budget in the net recipient countries such as Hungary, Bulgaria and Lithuania, which would be eliminated if the EU were dissolved, the losses would almost double. In contrast, the net contributor Germany would only gain 0.2 percentage points in this scenario. “The advantages that the net contributors could derive from an end to the transfer payments would be much smaller than the losses that would result from the dissolution of the EU,” said co-author Jasmin Gröschl.
The analysis is based on a model that simulates the economic consequences in the event that various integration steps are reversed. The end of the single market would have the greatest impact in Germany (minus 3.5 percent), followed by the end of the free movement of people in the Schengen area (minus 1.0 percent) and the dissolution of the monetary union (minus 0.7 percent). Only in Germany and Luxembourg would an end of the euro have significant negative consequences for the real economy.
The economists are asking the politically unrealistic question about the consequences of the dissolution of the EU because this better reflects the economic benefits of economic integration in the EU – and probably also because the Union has become smaller for the first time with Brexit. The UK is the only one of the leading industrialized nations (G7) whose economy contracted between 2019 and 2022.
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