German Economic Institute warns of what could Germany suffer if leaving the European Union

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According to a study by researchers at the German Economic Institute (IW) in Cologne, Germany’s exit from the European Union would clearly lead to a serious economic crisis and a permanent loss of prosperity for the population in Germany.

The far-right Alternative for Germany (AfD) party seeks to curtail European integration, arguing that the EU should only be an economic and conciliatory bloc made up of some loosely linked states.

According to the researchers, in the event of Germany’s exit from the European Union, losses of 5.6% of real GDP, or about 690 billion Euros, are expected after five years. About 2.5 million jobs could be lost in the fifth year of Brexit.

According to the study, these losses are almost equivalent to the value-added losses caused by the Covid pandemic and the energy cost crisis after the Russian attack on Ukraine.

These figures are based on a scenario that happened in the past, and experts predict that losses will also be similarly high in a scenario that happens in the future.

In the study, scientists estimated what would have happened to Germany had it left the European Union at the same time as Britain.

In order to determine this, they first examined the economic effects of Brexit on Britain from the referendum in the summer of 2016 until 2021 and then transferred these effects to Germany, taking into account the differences between the two countries.

According to the researchers, the impact of a physical exit of Germany from the Union is likely to be higher, given Germany’s close ties with other EU countries and its membership in the Eurozone.

Regarding Britain, experts wrote that the decision to leave the EU had already led to losses in economic growth even before its implementation on January 31, 2020, as the pound sterling lost value against the euro, making imports more expensive.

The researchers pointed out that uncertainty about future relations with the EU was also having a negative impact on investments, and Britain lost the opportunity to achieve trade prosperity within the EU by exiting.

Although the British government was able to conclude new trade liberalization agreements with other countries, these agreements essentially reproduced EU agreements with the same countries, so no new market access opportunities were developed.

Although two new agreements have been struck with Australia and New Zealand, the UK government expects a very small long-term boost to economic performance: GDP growth of 0.08% from the agreement with Australia and 0.03% with New Zealand, until 2035.

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