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Schengen collapse may cost EU up to €1.4tn in decade

A new study conducted in Germany shows that possible collapse of Europe's passport-free Schengen area could cost EU up to 1.4 trillion euros over the next 10 years.

A new study shows that possible collapse of Europe's passport-free Schengen area could cost member states of the European Union (EU) up to 1.4 trillion euros over the next decade.

The study has been carried out by Germany's Bertelsmann Foundation and its results were released on Monday, AFP reported.

According to the estimate offered in the study, under a worst case scenario in which the reintroduction of border controls by EU states would cause import prices to increase three percent, the costs of this development to Germany, as bloc's largest economy, could be as much as 235 billion euros between 2016 and 2025, and the cost to France would be as high as 244 billion euros.

The study also showed that at a minimum, with import prices rising one percent, a breakdown of Schengen would cost the EU roughly 470 billion euros over the next decade.

The figure would climb to 1.4 trillion euros, or roughly 10 percent of annual gross domestic product (GDP) in the 28-member EU bloc, under the worst case scenario.

"If border controls are reinstated within Europe, already weak growth will come under additional pressure," said Aart De Geus, president of Bertelsmann.

Schengen was established over 30 years ago and it has currently 26 members, 22 of which are also EU members. The system of passport-free travel, however, has come under severe pressure over the past half a year due to a huge flow of migrants entering Europe after fleeing war-torn countries in the Middle East and North Africa.

To contain the constant inflow of asylum seeker and to ensure that they have an overview of who is entering their territory, many countries within the Schengen area have reintroduced border controls in recent months, stirring fears about possible collapse of the whole system.

Underscoring the urgency of the issue, Germany's Interior Minister Thomas de Maiziere told public television channel, ARD, on Sunday that EU member states, which have been arguing for months on how to deal with the migrant crisis, must agree to a common approach within two weeks if they wanted to avoid such a fate.

According to Bertelsmann Foundation’s study, collapse of the Schengen area will not only be a devastating symbolic setback for Europe, but will also increase the amount of time it takes for various kinds of commodities to be transported across European borders, raising relevant costs for companies and consumers.

The Bertelsmann study, which was conducted by Prognos AG, estimated that the minimum costs of the possible collapse of eurozone to Germany and France would be 77 billion euros and 80.5 billion euros, respectively, up to 2025.

The study also noted that a collapse of Schengen would have high costs for countries outside the zone, with its combined financial burden on the United States and China estimated between 91 billion euros and 280 billion euros, respectively, over the next decade.


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