Daily Management Review

Rejection of the Schengen Agreements Can Bring Europe a Loss of € 18 Billion


According to the European Commission, restoration of border control between the EU countries can cost from € 5 billion to € 18 billion. This is only the direct costs. Indirect spending can grow much more, since the borders restoring will a negative impact on the European market, transport and thetourism sectors, as well as the single currency system.

flickr, Will Baker
flickr, Will Baker
According to a report published yesterday, the European Commission estimates that restoration of systematic passport checks at the EU internal borders could cost the European economy € 5 billion - € 18 billion a year. It will also interfere with functioning of the internal European market and the euro’s circulation. The most likely amount of direct costs is € 7,1 billion. According to this scenario, cost of an additional hour for freight transport idling at the border would number € 3,4 billion a year (if a truck have to wait for two hours, then the costs will rise to € 6,7 billion ). Additional time for passenger transport will cost € 2,6 billion, and costs of documents’ check would amount € 1,1 bln. If the EU countries abandon the current policy and re-introduce visas to each other, it will cost the tourism industry € 10 billion -20 billion.

According to the European Commission, rejection of the Schengen agreement conditions will seriously affect the transport sector, consumer prices, the labor market and the tourism industry. Permanent or long-term restoration of border checks will have a negative impact on domestic EU trade (its volume is estimated at € 2.8 trillion per year), and can lead to higher prices. Working migrants would also be affected – there is about 1% of them in the EU population. "If the process is set in motion, it will jeopardize the economic integration, including effective functioning of economic and the monetary union. In the medium term, indirect costs may prove to be much more than direct estimates", - stated the European Commission.

The Schengen area consists of 26 states, an agreement between the two countries entered into force on 26 March 1995. Recently, due to the influx of migrants (several million refugees appeared in Europe in the past year), officials have been actively discussing changing regulations and tighter control over borders. Under current rules, a Schengen country has the right to close its borders for a period of up to six months, but ministers want to increase this period up to two years. Many EU countries have already introduced a temporary border control. So, in the end of January it became known that Germany plans to extend the frontier control for an indefinite period of time. According to estimates of France Strategie, the expert body to the French government, restoration of border control will cost the French to € 10 billion a year in the long run. In the short term, abolition of the free movement of EU citizens within the Schengen area will cost France € 1-2 billion. Earlier, head of the Federal Association of Chambers of Commerce in Germany Martin Wansleben said that border control and related inconvenience may cost the German economy € 10 billion a year .

source: independent.co.uk

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