The UK economy has been on the decline since Brexit. The remaining EU states are also likely to be in a much worse position without the union: the consequences of a complete dissolution would be drastic for Germany, the IFO Institute shows in a study.
According to one study, a dissolution of the European Union (EU) would lead to enormous losses in prosperity for the member states. According to a study by the IFO Institute and EconPol Europe, not only recipients of transfer payments would suffer from the dissolution of the EU, but also net contributors such as Germany.
Germany's gross domestic product (GDP) should therefore fall by 5.7 percent per capita if the EU were to dissolve, in Austria by 7.8 percent, in the Netherlands by 7.7 percent and in Belgium by 10.2 percent. For France and Italy, GDP would shrink by 4.1 percent each. However, smaller economies would lose the most, such as Malta, where GDP is expected to shrink by 19.4 percent, by 18.1 percent in Luxembourg and by 11.8 percent in Estonia.
"If one also takes into account the transfer payments among the EU countries, the loss of prosperity for transfer recipients such as Hungary, Lithuania and Bulgaria would almost double," said IFO researcher Jasmin Gröschl. Net contributors like Germany and Sweden would lose slightly less.
"However, 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 Gröschl. For Germany, the benefits amounted to just 0.2 percentage points, compared to a loss of 5.2 percent from dissolving all EU agreements.
According to economists' calculations, smaller EU countries would suffer more from the consequences of the dissolution of just the EU internal market. According to the study, the loss of prosperity for large EU economies such as Germany (3.6 percent), France (3.0 percent), Italy (2.7 percent) and Spain (2.5 percent) is lower than that for small EU economies. For Austria, the dissolution of the EU internal market would mean a loss of prosperity of 5.6 percent.
A dissolution of the EU customs union, on the other hand, would have fewer effects than the dissolution of the internal market. According to the study, the largest losses occurred in Ireland (0.4 percent) and in the Czech Republic, Luxembourg, Poland and Slovenia (0.3 percent). The negative effects on the other EU countries would be small compared to today. A dissolution of the euro zone would have negative effects on all member states. However, they would only be significant for Luxembourg (2.5 percent) and Germany (0.7 percent).
