A recent study has found that all countries within the European Union would have suffered serious economic consequences had the EU disintegrated a decade ago during the debt crisis — with Belgium suffering considerably more than the majority of its neighbours.
According to a joint report published on Tuesday by the Ifo Institute for Economic Research and EconPol Europe, Belgium's GDP per capita would be 10.20% lower today if the EU had fully dissolved in 2014. By comparison, the Netherlands would have experienced a 7.70% decrease, while Germany (5.23%) and France (4.07%) would have undergone smaller but still significant declines.
Luxembourg, however, would have been much more severely hit (18.06%). Moreover, the study found that, in general, smaller countries would have endured by far the worst consequences of the bloc's disintegration: Malta, the country with the smallest surface area in the EU, would have undergone the greatest reduction in per capita GDP (19.38%), followed by Luxembourg (the second smallest by surface area).
The study also noted that the UK's current economic woes would be significantly more dire had the EU broken up two years before the Brexit referendum: in particular, it found that the country's GDP per capita would be 3.12% lower than it is now.
The benefits of being single
In addition, the study noted that the dissolution of the European single market — which ensures the free movement of goods, services, capital, and persons — would have had especially negative consequences for Member States: roughly three-quarters of countries' estimated GDP reductions would have been solely a consequence of the single market's disintegration.
In particular, Belgium's GDP per capita would be 7.06% lower than it is today, while Malta's would have fallen by 14.56% and Luxembourg's by 13.47%. France, Germany, and the Netherlands would have also suffered notable, albeit smaller, declines (2.96%, 3.55%, and 5.11% respectively).
"The counterfactual analysis of a reversal of the European integration process clearly points out that disintegration would impose considerable costs on the EU Member States," the study noted. "Above all, the dissolution of the European single market would have a major impact on production, trade, and income in the individual countries."
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"If other integration steps were withdrawn, the effects would be smaller, but should not be underestimated since the resulting absolute costs will accumulate year after year after the disintegration shock," it stated.
Intriguingly, researchers also found that the break up of the EU would have had detrimental ramifications outside of the bloc. In particular, it noted that Russia's GDP per capita would be 0.76% lower today had the EU disintegrated in 2014 — a particularly ironic fact, given that Russia leaders have long railed against the supposed nefarious impact of EU policies and enlargement — while Turkey would have endured a similar decrease (0.74%).
Indeed, countries literally on the other side of the world, including Australia (0.08%), Taiwan (0.06%), and the US (0.05%), would also have been negatively impacted, albeit only marginally.
