Great Britain hoped for more trade with the world and more political autonomy from Brexit. It only partially worked. Economists warn that Germany would benefit greatly if it were to leave the EU.
According to analyzes by scientists, leaving the European Union would cause Germany serious economic damage. “A Dexit would deliberately trigger a serious economic crisis and a lasting loss of prosperity for the population in Germany,” write researchers at the Institute of German Economics (IW) in Cologne. The study is available to the German Press Agency in Berlin.
The AfD wants to partially reverse European integration. From their point of view, the EU should only be an economic and interest community of loosely connected individual states.
According to the researchers, an estimated loss of 5.6 percent of real gross domestic product (GDP) or around 690 billion euros would be expected after five years. Around 2.5 million jobs could be lost in the fifth year. This roughly corresponds to the economic value creation losses caused by the corona pandemic and the energy cost crisis after the Russian attack on Ukraine.
These numbers refer to a scenario that is in the past. However, in their estimation, the costs of such a scenario in the future would be similarly high. The scientists calculated what would have happened to Germany if it had left the EU at the same time as Great Britain. To determine this, they first examined the economic effects of Brexit on Great Britain from the referendum in the summer of 2016 to 2021 and then transferred these effects to Germany – taking into account the differences between the two countries. The impact of an actual Dexit would probably be higher, according to the authors, who point to Germany’s closer ties with other EU states and membership in the euro.
About Great Britain, the scientists write that the decision to leave the EU had already led to losses in growth before it was implemented on January 31, 2020. The pound lost value against the euro, which made imports more expensive. Uncertainty about future relations with the EU had a negative impact on investments. In addition, Great Britain missed out on the boom in trade within the EU due to Brexit. The government in London was able to conclude new free trade agreements with other countries – but these would have essentially reproduced the EU’s agreements with these countries. New market access opportunities have therefore not been developed.
Two new agreements were concluded with Australia and New Zealand. However, the British government is assuming only a very small long-term boost to economic performance: 0.08 percent GDP growth from the agreement with Australia and 0.03 percent from that with New Zealand, each up to 2035. “Compared to the estimated losses “With Brexit amounting to 5 to 10 percent of economic output, these advantages are negligible,” write the authors of the study.