The Economic Costs of Non-Schengen: What the Numbers Tell Us

Written by | Monday, July 25th, 2016
European Values

Anna auf dem Brinke (Notre Europe – Jacques Delors Institute)

The so-called Schengen system, which has operated on the basis of an agreement for more than 20 years, nowadays finds itself under intense pressure. In response to the migration crisis and the recent terrorist attacks, a number of participating countries have temporarily resorted to the restoration of border controls, though it is not yet clear how exactly this step should solve the existing problems. On the contrary, it is clear that the end of the Schengen system would bring significant costs.

The greatest damage from a permanent reintroduction of border controls would be in the case of trade. There would be delays at borders, which would extend the time required for delivery, and the overall efficiency of the EU single market would decrease. Related costs would be comparable to the introduction of a new tax of 1-3 percent or about 0.8 percent to 2.7 percent of the GDP of the Schengen countries. In the longer term, the amount would add up to a similar amount as in the case of Brexit and it could be eventually also compared to the amount of the Greek debt. It could even pose a direct threat to individual EU economies.

The reintroduction of border controls would have a negative impact on the transport of passengers. This would be a problem especially for those who commute to work to another EU country. Delays at the border would in this case also lead to reduced efficiency, which could also mean restrictions on such commuting. However, tourism would probably be also affected. It is expected that the number of tourists would drop by as much as 5-25 percent as the number of day trips and short trips would be reduced. Due to the delays at the borders, the citizens of the Member States would be less willing to undertake such journeys. The changes would also affect foreign travelers holding Schengen visa.

The far-reaching consequences associated with the reintroduced border controls is yet another important issue to consider. First, the EU would have to rebuild the necessary infrastructure, often literally from the scratch, then maintain it and keep personnel at the borders. Based on the cost estimates for protecting the borders between the US and Canada, the EU would incur extra costs of around 5-6 billion EUR annually. The very existence of the Schengen area is also a major topic during the EU’s meetings with third countries under its Common Foreign and Security Policy. Its end would also, in the context of the reflections on Brexit and the still unresolved Eurozone crisis, send a negative signal to the rest of the world.

(The study can be downloaded here: http://www.delorsinstitute.eu/011-22826-The-economic-costs-of-non-Schengen-what-the-numbers-tell-us.html)

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