Europe's nations and regions

Juergen Matthes, Berthold Busch, 27 April 2016

Studies attempting the quantify the economic effects for the UK of Brexit have come up with conflicting results – ranging from significant advantages to marked losses. Using a meta-analysis, this column shows this can be explained by different methods and assumptions, as well as varying coverage of effects. The forward-looking, model-based studies are unable to capture many positive effects of economic integration on welfare and growth. In comparison, backward-looking studies tend to find significantly larger trade effects of economic integration agreements. The meta-analysis suggests that in case of Brexit, GDP losses for the UK in the range of 10% or more cannot be ruled out in the long run.

Gabriel Felbermayr, Jasmin Gröschl, Thomas Steinwachs, 27 April 2016

The refugee crisis has placed Europe’s Schengen Agreement under stress, with some calling for the reintroduction of identity checks and other border controls. This column presents new estimates of the potential costs of such controls. On average, the removal of controls at one border acts like the removal of a 0.7% tariff. The controls currently notified to the EU Commission could lower EU GDP by around €12.5 billion. The full demise of Schengen would be about three times as costly.

Swati Dhingra, Hanwei Huang, Gianmarco I.P. Ottaviano, Thomas Sampson, John Van Reenen, 04 April 2016

The economic consequences of leaving the EU are at the heart of the Brexit debate. This column studies how changes in trade and fiscal transfers to the EU following Brexit would affect living standards in the UK. Across a range of scenarios, Brexit leads to lower income per capita, but the magnitude of the loss depends on what trade policies the UK adopts post-Brexit. To minimise the economic costs of Brexit, the UK would have to remain closely integrated into the Single Market. 

Matthias Busse, Daniel Gros, 04 April 2016

Through the Eurozone rescue mechanisms, Germany provided the periphery with hundreds of billions in debt at very low rates. There is a widely held notion that these savings would have been better used at home. This column challenges this notion, presenting evidence that Germany’s net asset position held up well, remaining much higher than domestic returns. The main reason is that Germany’s part in the rescue operations was actually much smaller than its claims towards the periphery.

Soumaya Keynes, 30 March 2016

On 23 June, the UK will decide whether or not to leave the EU. While the general population is divided on the issue, the overall consensus among economists at a session on Brexit at the Royal Economic Society’s annual conference was that Britons should vote to stay in the EU. This column presents the views of the four panellists at the session on the trade implications and the economic and political economy costs of Brexit. 

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