Schengen collapse could threaten growth in Europe: study

A collapse of the passport-free Schengen area would have a dramatic effect on economic growth in Europe and put the continent's prosperity in danger, a study by a German think tank showed on Monday.

Reinstatement of internal border controls within the Schengen area would push up production costs and prices, according to the Bertelsmann Foundation.

If border checks were reinstated permanently, economic costs to Germany alone would be up to 235 billion euros (about 258.89 billion U.S. dollars) between 2016 and 2025. For the European Union as a whole, the costs would amount to as much as 1.4 trillion euros over the next decade.

"If Europe's internal barriers go back up, it will put even more pressure on growth which is already weak," said Aart De Geus, chairman of the foundation.

Even in the most positive scenario, the gross domestic product (GDP) of Germany would drop by 77 billion euros, and that of the whole EU by 470 billion euros.

According to the study, longer waiting times for passport checks would lead to higher labor costs and increase of stocks in companies.

"Both of these factors would result in higher production costs and, in turn, higher prices," said the think tank in a statement, warning that exports, investments and production would also take hits, resulting in less economic growth.

In place for over two decades, the 26-member Schengen area has been under tremendous pressure since last year when millions of refugees escaping wars and poverty flooded into Europe.

The endless migration influx forced a number of countries including Germany, Sweden and Denmark to reintroduce controls at their borders, leading to concerns that the symbol of European integration would collapse in the face of the biggest humanitarian and political challenge since the Second World War. Endit