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21 March 2019

Bertelsmann Stiftung: Brexit to cost EU citizens up to 40 billion euros annually


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The study shows that the British would have to shoulder the biggest income losses after Brexit. But in export-oriented countries like Germany and France, Brexit would cost citizens billions of euros. The US and China, on the other hand, could even benefit from the British withdrawal.


Nearly three years after the initial EU referendum took place, it is still uncertain how Brexit will be executed. But one thing is clear: trade in goods and services would become more expensive, the uncertainty will burden many firms. This puts pressure on competition, consumption and investment – especially in the absence of a withdrawal agreement between the UK and the EU. Citizens in EU countries (excluding the UK) would have to bear income losses of 40 billion euros per year with a hard Brexit. The British themselves would be hit hardest by a "No-Deal-Brexit": UK citizens would suffer income losses of 57 billion euros per year (around 900 euros per capita). In Germany, too, the loss of income due to a hard Brexit would be high at around 10 billion euros per year. This would make the loss of income in Germany the highest in Europe, after the UK. France and Italy would also see significant income losses amounting to billions of euros.

For the analysis, economists Giordano Mion of the University of Sussex and Dominic Ponattu our economic expert, analyzed data on global trade flows to predict the consequences of a Brexit. The study provides results for around 300 regions in Europe. The income losses are expressed as gross domestic product per year (and per inhabitant).

Soft brexit reduces income losses

A so-called soft Brexit could greatly mitigate the negative consequences. The authors show that a soft Brexit could halve the loss of income for Germany to five billion euros compared to a hard Brexit. In the UK, the losses of around 32 billion euros would also be considerably lower than for a hard Brexit (57 billion euros). The entire EU, excluding the UK, would incur annual income losses of around 22 billion euros in a soft Brexit scenario.

While Europe suffers, the US and China could profit from Brexit

The study also shows that some countries outside Europe could benefit from Brexit. According to the simulations, US incomes would benefit from a hard Brexit and could rise by around 13 billion euros annually. In China, incomes would rise by around five billion euros annually, in Russia a slight increase of around 260 million euros annually would be expected due to Brexit. "European value chains are negatively affected by Brexit. This would make trade within Europe more expensive and trade with the rest of the world could become more attractive." says Ponattu.

Full analysis



© Bertelsmann Stiftung


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