Monday, 27 April 2015
The United Kingdom leaving the European Union would not only be costly for the country itself, but also for its partners. Ireland, Luxemburg, and Belgium would have the most to lose than other member states, according to a study by the Bertelsmann Foundation, which was published on Monday. The United Kingdom itself would be the most affected. Its GDP (gross domestic product) per habitant could, in the worst case scenario, fall by as much as 14% between now and 2030, compared to what it could be if it stays in the EU. What the UK could save by not contributing to the EU budget would not compensate what it would lose, the authors of the study warn.
The Conservative British Prime Minister David Cameron has promised to a referendum on the UK remaining in the EU if he is reelected after the legislative elections on the 7th of May. This referendum would happen between now and 2017. The Conservatives and Labour are currently about level, according to the latest polls.
Along with the Munich Institute of Economic Research, Ifo, the researchers from the German foundation evaluated the effect of a “Brexit”. “Brexit” is the name commonly given to a UK EU exit. The researchers drew up several isolation scenarios, a scenario where the country would continue to participate in European exchanges, like Switzerland, and a scenario where the UK lost all the trade privileges that come with being part of the EU.
In all the cases put forward, London’s partners would lose out too, starting with Ireland: its GDP per habitant could fall by 0.8% to 2.7% between now and 2030. Luxemburg, Belgium and Sweden would also be among the countries most affected. France’s GDP would fall by 0.06% to 0.3% per habitant.
These possible effects on trade would add to other economic effects, such as the repercussions of a fall in the attraction of the London financial centre – which could benefit other European centres – and an effect on the budget. The British contribution to the EU budget would need to be repartitioned between the other member states. This alone would mean Germany would have to pay an extra 2.5 billion euros a year, and France would have to pay an extra 1.9 billion a year, the researchers claim.
The study “clearly shows the necessity of committing to keeping the UK in the EU”, the president of the Bertelsmann Foundation, Aart de Geus, said in a press release. “Even just from an economic point of view, a Brexit would be a loss, with the British being the first to lose out”, he said.