The immigrant crisis and the recent wave of radical violent attacks in Europe have caused six countries to reinstate border controls (Austria, Denmark, France, Germany, Norway and Sweden). The Schengen Agreement has facilitated mobility within the region since being enacted in 1995 and has grown over time to include 400 million citizens in 26 countries. Even non-Schengen countries like the U.K. or Turkey benefit because of trade that flows more freely within the space and impacts those economies.
If polled now, most people would state that membership has promoted trade and the overall economy. So what if this agreement dissolved in effect and there is a reintroduction to border controls for all countries?
-Has Schengen really promoted trade in goods and services, and, if yes, by how much?
-Which E.U. member states benefit the most from it?
-What are the trade and welfare costs of the border controls currently notified to the commission?
-And, what if the border controls were reinstated at all internal borders?
There will be a cost, the only question is just exactly how much?
The costs of a complete Schengen collapse What if identity checks were to be reinstated at all internal borders? In this scenario, our calculations suggest that overall goods and services trade of EU28 countries declines, on average, by 4.2%, relative to the status quo in 2011; this corresponds to an annual decline in trade volumes of €221.34 billion compared to a counterfactual situation without any border controls imposed within the Schengen area. The aggregate real GDP of EU28 members would fall by 0.31%; that is, by €39.3 billion.