While talk of a so-called ‘Dexit’, in which Germany would leave the European Union, is the preserve of just a handful of right-leaning politicians, such a situation would be economically catastrophic, a new study by the Austrian Institute of Economic Research (WIFO) has found.
The study, which was conducted on behalf of the Initiative for a New Social Market Economy (INSM), claims that were Germany to leave the EU, there would be a ‘significant income loss’ for all German citizens, to the tune of about €2,500 per capita, or as much as €5,000 per capita in the short term.
‘The collapse in real income would be greater in Germany than in any other country,’ the study puts it.
For every euro that Germany pays into the EU, it receives around €12 in return, meaning that an exit from the EU would mean that real income would shrink by between €137 billion to €276 billion, or around €200 billion on average.
Export collapse
The analysis, conducted under the WIFO head professor Gabriel Felbermayr, and taking some of the learnings from the Brexit process, notes that German exports to other EU countries would decline sharply, while trade with third countries would not be able to compensate for the losses.
Imports and exports of goods would fall by almost 20%, which would lead to a decline in real value added in industry of an average of 7%. The metals, plastics, chemicals and food sectors would be particularly affected, it noted.
Across most sectors, declines of more than 20% would be expected in terms of German trade with other EU countries.
Overall, real value added would fall in all service sectors, although the effect would be less pronounced than in industry. The agricultural sector would be particularly badly affected, with a loss of real value added of between 5.8% and 10.2%.
‘No country benefits more’
In summary, the study says that the economic benefits of EU membership for Germany are ‘significant’, and go far beyond direct financial contributions.
“You can criticise the waste of money, inefficiencies and bureaucracy in the EU, but the bottom line is that it has now been scientifically proven that no country benefits as much from the EU as Germany,” commented INSM managing director Thorsten Alsleben.
“Anyone who is considering Dexit must know that it would cost every German citizen an average of almost €2,500 per year. Dexit would be a door into the abyss.”
