The Economic Research Institute calculates that leaving the European Union would cost Austria between 5.3 and 10.4 percent of GDP.
After Brexit, Great Britain leaves the European Union, some politicians in Europe are toying with a similar move. According to an analysis by the Institute for Economic Research (Wifo), losing EU membership would be costly for Austria. Gabriel Felpermeyer and Inga Heiland, director of Wifo at the Norwegian University of Science and Technology, calculate that GDP prices will be 35 billion euros, or 7.8 percent lower, on average in 2022. GDP is projected to fall between 5.3 percent and 10.4 percent. In absolute figures, the expected effect is between 24 and 47 billion euros per year.
The single market provides the largest benefit to the EU, accounting for 74 percent of the overall benefits for EU members. The Schengen zone is the second biggest driver of prosperity, analysis shows. And monetary union is the third most important factor.
UK GDP fell by 3.2 to 6.7 percent
To assess the economic benefits of EU membership, one must analyze the integration measures that have taken place so far. Because of Brexit, Great Britain’s real gross domestic product (GDP) will be between 3.2 percent and 6.7 percent lower than otherwise. The collapse of the EU will affect Austria more severely in the long run: on the one hand, the British have a large domestic market, but on the other hand, Austria will suffer more from a solo venture due to its geographical location.
Calculated per capita, this corresponds to an economic loss of 3,860 euros on average. The views here range from 2,735 euros to 5,190 euros per person. In the EU ranking, according to the simulation results of two economists, Austria will come in sixth place out of 27 countries. In a surprise “breakout” event, the damage can be doubled in a short period of time.
About 2.3 billion euros in repayments
However, since Austria is a net contributor to the EU, the costs of EU membership must be deducted from the economic benefits. However, annual costs are limited to between 113 and 184 euros per capita: Austria pays around 3 billion to 4 billion euros annually, with the highest payment to date of 3.55 billion euros in 2020. However, in recent years an average of around 2.3 billion euros has returned to Austria for agriculture or research.
As Heiland and Felbermeyer explain, the EU’s economic advantage is reflected in EU membership relative to the United States. While those countries that joined the European Union in 2004 reached 35 percent of the US’s GDP per capita 20 years ago, by 2022 they will already have reached 57 percent of the US level. “About half of the observed integration can be attributed to EU membership,” the economists said. (APA)
