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Schengen collapse would be costly affair

February 22, 2016

The flood of migrants entering Europe may eventually lead to the EU having to give up its Schengen passport-free travel zone. But a fresh study warned the economic follow-on costs of such a move would be huge.

Border controls
Image: picture-alliance/dpa/A. Weigel

The Schengen zone of passport-free travel currently counts 26 members, 22 of which are part of the European Union.

While millions of people have enjoyed the advantages of crossing borders without controls, the system has come under massive pressure recently as migrants predominantly from the Middle East and Africa keep pouring into Europe.

A number of countries within Schengen have already reintroduced temporary border checks in recent months, leading to fears among businesses that the whole system could collapse.

A new study commissioned by Germany's Bertelsmann Foundation revealed Monday that the economic damage of such a collapse could easily amount to up to 1.4 trillion euros ($1.55 trillion) for the EU over the next decade.

Bad deal for businesses

If the reintroduction of border controls resulted in import prices going up by 3 percent, the costs to Germany could be as much as 235 billion euros over the next 10 years, while France would see itself confronted with damage of 244 billion euros, the study said while focusing on a worst-case scenario.

With import prices increasing by just 1 percent, a breakdown of Schengen would cost the EU roughly 470 billion euros over the next decade, it said.

"If border controls are reinstated within Europe, already weak growth will come under additional pressure," Bertelsmann Foundation President Aart De Geus said in a statement.

A collapse of Schengen would increase the amount of time it takes for goods to be transported across European borders, raising costs for both companies and consumers.

The study maintains that a breakdown of the Schengen zone would also increase costs for countries outside the EU, with the combined burden on the US and China over the next 10 years estimated at between 91 billion euros and 280 billion euros.

hg/bea (Reuters, dpa)