06/03/2016

BorderscouldcostEurope$20billionayearMar.4,2016

Borders could cost Europe $20 billion a

year
by Mark Thompson @MarkThompsonCNN
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March 4, 2016: 9:27 AM ET

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Europe is back in deflation, and business and consumer confidence is sagging.

The last thing it needs is another economic headache, but the refugee crisis might deliver one if it
isn't fixed soon.
To slow the influx of migrants, countries are reintroducing border controls in a region used to
traveling and trading freely. If they return in full, the cost to Europe could be as high as 18 billion
euros ($20 billion) per year, the European Commission said Friday.
About 1.2 million people applied for asylum in the European Union last year, double the number in
2014, and more than half of them came from Syria, Afghanistan and Iraq.
The influx shows no signs of abating: the International Organization for Migration estimates that
130,000 migrants crossed the Mediterranean sea to Europe in the first nine weeks of this year.
The European Union is struggling to cope with the humanitarian emergency. Eight countries have
reintroduced border controls in the last six months, threatening to blow apart the region's Schengen
system of border-free travel and kill a core EU principle of freedom of movement.
EU countries and Turkey will meet Monday to discuss the refugee crisis. The meeting has been billed
as a last chance to save Schengen.
If they fail, and border controls are reintroduced across the 26 members of the passport-free zone,
the region will very quickly feel the pain.
"These costs would be concentrated on certain actors and regions but would inevitably impact the
EU economy as a whole," the European Commission said Friday.
Here's where the pain would be immediately felt, according to the Commission:

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BorderscouldcostEurope$20billionayearMar.4,2016

Higher transport costs

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Countries such as Poland, the Netherlands or Germany would face more than 500 million euros of
additional costs for the road transport of traded goods.

Mortgage & Savings

For countries such as Spain or the Czech Republic, the additional costs to businesses would exceed
200 million euros.

Lost time for commuters

The reinstatement of passport checks would lead to delays at borders.
That would cost Europe's 1.7 million cross-border workers, or the companies that employ them,
between 2.5 billion and 4.5 billion euros in time lost.

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Europe's passport-free travel area stretches from the Russian border in the north to Spain in the south.

Millions of job openings!

Fewer visitors

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Europe's tourism industry would suffer too. The European Commission estimates that 13 million
tourist nights could be lost, with a total cost of 1.2 billion euros.

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Governments would have to hire more staff to police the borders, costing them about 1.1 billion
euros more in administration costs.
If the border controls remain in place long term, the costs will mount. A report prepared for the
French government last month estimated that the return of border checks and passport controls
could cost Europe as much as 100 billion euros ($110 billion) over a decade, knocking 0.8% of
Europe's GDP by 2025 in the worst case.
The Schengen area includes four countries outside the European Union -- Iceland, Lichtenstein,
Norway and Switzerland. Six EU countries are not part of the zone -- they have either opted out of
the agreement, or are still waiting to be admitted.
CNNMoney (London)
First published March 4, 2016: 9:27 AM ET

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BorderscouldcostEurope$20billionayearMar.4,2016

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