A new Bertelsmann Stiftung study pointed out leaving the EU could be really expensive, especially for the United Kingdom
by Emanuele Bonini
A farewell to the European Union could cost United Kingdom more than 300 billion Euro, according to a report released today in Brussels. Assuming the UK could leave the EU in 2018, in the year 2030 – 12 years after a possible "Brexit" (UK exit from the EU) – the negative effects will have shown their full impact, as suggested by a current Bertelsmann Stiftung study in collaboration with the Ifo Institute in Munich. It is the first study that examines the consequences of a UK exit from the EU not only for the United Kingdom, but for all the other EU countries as well. If trade economic as well as dynamic economic consequences are taken into account together, the GDP losses in the unfavourable scenario could reach 14%. It means these losses in 2014 values would correspond to a GDP reduction of around €313 billion for the entire national economy, or lower by around €4.850 per capita. Possible savings such as the cancelling of EU budget payments that currently total around 0,5% of the British GDP could not compensate for economic losses, even in the best case scenario.
Going more into details, leaving the EU would increase the costs of trade between the UK and EU and reduce trade activities. The severity of the impact will differ for individual British industries. For financial services, anticipated losses in added value reach around 5% in the unfavourable scenario. The chemicals, mechanical engineering and automotive industries will also see steep losses in added value because they are heavily incorporated in European value chains. The chemicals industry will face the greatest drop (nearly 11%).
A possible "Brexit" would be also a problem for all the other EU member States, who would have to adjust to higher expenditures for the EU budget. For example, to compensate for the loss of the UK’s financial contribution, Germany would need to pay an additional €2.5 billion annually, France €1.8 billion, Italy €1.4 billion, and so all the other (even if with different contribution). In conclusion «a "Brexit" is a losing game for everyone in Europe from an economic perspective alone», stressed Aart De Geus, Chairman and CEO of the Bertelsmann Stiftung. «But aside from the economic consequences, it would be an especially bitter setback for European integration as well as Europe’s role in the world».
A farewell to the European Union could cost United Kingdom more than 300 billion Euro, according to a report released today in Brussels. Assuming the UK could leave the EU in 2018, in the year 2030 – 12 years after a possible "Brexit" (UK exit from the EU) – the negative effects will have shown their full impact, as suggested by a current Bertelsmann Stiftung study in collaboration with the Ifo Institute in Munich. It is the first study that examines the consequences of a UK exit from the EU not only for the United Kingdom, but for all the other EU countries as well. If trade economic as well as dynamic economic consequences are taken into account together, the GDP losses in the unfavourable scenario could reach 14%. It means these losses in 2014 values would correspond to a GDP reduction of around €313 billion for the entire national economy, or lower by around €4.850 per capita. Possible savings such as the cancelling of EU budget payments that currently total around 0,5% of the British GDP could not compensate for economic losses, even in the best case scenario.
Going more into details, leaving the EU would increase the costs of trade between the UK and EU and reduce trade activities. The severity of the impact will differ for individual British industries. For financial services, anticipated losses in added value reach around 5% in the unfavourable scenario. The chemicals, mechanical engineering and automotive industries will also see steep losses in added value because they are heavily incorporated in European value chains. The chemicals industry will face the greatest drop (nearly 11%).
A possible "Brexit" would be also a problem for all the other EU member States, who would have to adjust to higher expenditures for the EU budget. For example, to compensate for the loss of the UK’s financial contribution, Germany would need to pay an additional €2.5 billion annually, France €1.8 billion, Italy €1.4 billion, and so all the other (even if with different contribution). In conclusion «a "Brexit" is a losing game for everyone in Europe from an economic perspective alone», stressed Aart De Geus, Chairman and CEO of the Bertelsmann Stiftung. «But aside from the economic consequences, it would be an especially bitter setback for European integration as well as Europe’s role in the world».
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