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this is the major concern of Europeans in early 2016. While the flow of migrants who risk their lives in the Mediterranean Sea to reach European shores is increasing every day, the closure of the Schengen area of free European circulation rose from a week of threat stage to that of real possibility. What impact would such a measure on the European economy, and in particular tricolor? This is what was asked France Strategy, reflection body linked to Matignon, in an unpublished practice in Europe, published Wednesday, February 3.
“It is obvious that the current system does not work anymore. Current discussions back to question the reality of the Schengen area, and could lead to a general restoration of border controls, “ said Jean Pisani-Ferry, the Commissioner General of France Strategy.
Read also: Three questions to understand the Schengen crisis
in fact, the European Commission launched Wednesday 27 January, a procedure which could lead to restore to two years for controls some internal borders of the Union. Objective: To stem the tide of the 1.2 million refugees who joined the EU in 2015, mostly through Greece. The initiative is strongly supported by Germany, which seeks, as much by pragmatism by political necessity to maintain border controls with Austria. Reintroduced in September, they can not, as such, be maintained beyond eight months without activating the procedure of the Commission. In the specific case of France, the establishment of a state of emergency after the attacks of 13 November in the Ile-de-France has also resulted in a restoration of border controls.
Two scenarios
the decision of Brussels, unpublished, could lead to nothing less than a quarantine Greece, accused of negligence in the control and registration of migrants upon arrival on its soil. Athens now has three months to regain control of its border. In Europe, such a situation would have significant consequences for the economy, argues France Strategy.
“ If the efficacy and safety considerations are naturally those who matter most in the current context, it is not possible to ignore the economic consequences of a possible termination of the Schengen agreement “.
for the tricolor economy “ short term, the direct cost would be one to two billion euros, according to the frequency of border controls,” say the authors. They developed two scenarios, drawing particularly what is happening to the British border: a low scenario where additional border crossing time would moderate, and high scenario would be doubled this time, trucks are systematically monitored . The note concludes that half of the cost was due to a drop in attendance by tourists, deterred from discovering the Hexagon because of queues at main border crossings.
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Effects on foreign investment
38% of the cost would come from impact the 350 000 frontier workers commuting daily in Belgium, Germany, Luxembourg, Switzerland and Spain, and 12% to the cost of transportation of goods. Researchers point out in fact that “ for users, border control is similar to a tax on travel and commercial transactions. “
” In the short term, the cost is moderate since it represents less than one thousandth of [gross domestic product] French GDP [2 132.4 billion in 2014, latest available figure] . But if this were to become the norm, this could be problematic, “ says Mr. Pisani-Ferry.
In the long term, in fact, that’s all trade between countries the Schengen area that would be affected, says France Strategy. When two countries belong to the Schengen area, the total annual trade between the two countries is above 10% to 15%, calculated the experts. For France, the permanent introduction of controls would be equivalent to a 3% tax on trade between euro area countries, which would result in a loss of at least ten billion euros, half a point GDP in the next ten years. “This result [...] could be increased effect on foreign investment and financial flows (bank loans …)” says France Strategy.
export decline
the organization calculated that such a situation would lead in 2025 reduced exports from France to other members of the Schengen area of 11, 4% and 10.8%, depending on whether the partner is a member of the European Union or not. Imports of France from these partners would be reduced by 11.4% and 13.7% respectively.
In all the countries of the Schengen area, the impact would be of the same order of 0.8 percent of GDP, or 110 billion euros, “because some countries are more open than France” says Pisani-Ferry, who has not made of more specific analysis by country.
“These amounts are substantial. The impact of a temporary strengthening of border controls should remain limited in scope, but that of a permanent abandonment of the Schengen system would have a significant economic costs, higher than what was estimated to have been the commercial benefits of the euro, “ France concludes Strategy. That European leaders warned.
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