Malta would face above average losses to its economy in the event of Britain leaving the European Union, according to a report by the largest private operating non-profit foundation in Germany.
The report by Bertelsmann Stiftung says Ireland, Luxembourg and Malta would be the worst hit countries in such a scenario with a decrease in real GDP per capita by 2030 of 0.82 per cent, 0.48 per cent and 0.45 per cent respectively.
Making a calculation on today’s GDP figures for Malta, a UK exit would cost the Maltese economy €38.7 million.
Thieß Petersen, a senior expert at the foundation, told The Sunday Times of Malta: “In Malta, the potential losses in real GDP per capita are much higher than in the remaining EU-27 (EU without UK). The main reason is the strong economic links between Malta and the UK in the financial sector”.
British Prime Minister David Cameron has pledged to renegotiate some aspects of the UK’s EU membership if re-elected in Thursday’s general election, and then hold a referendum on whether Britain should remain in the bloc. Most polls show the country evenly split between the Yes and No camps.
The main reason is the strong economic links between Malta and the UK
Malta’s 0.45 per cent fall in GDP per capita in the event of Britain leaving the EU, however, is only the best case scenario as this is calculated under a ‘soft exit’ option – where the UK receives a status similar to that of Switzerland or Norway and thereby has a trade agreement with the EU.
Under the worst case scenario, wherein the UK would be isolated and would lose all its privileges arising from the EU’s 38 existing trade agreementswith other countries, the fall in Malta’s GDP per capita would be 1.34 per cent.
The report points out that Britain leaving the EU would mean additional payments to the bloc’s Budget by the remaining member states. Malta would have to pay €6 million extra a year to Brussels, the lowest increased contribution, while Germany would have to pay the most, with an extra €2.5 billion a year going to the EU’s coffers. France would face an additional bill of €1.87 billion.
The foundation also points out that the German economy would lose between €8.7 billion and €58 billion if Britain left the EU.
The report stresses, however, that exiting the EU could cost the UK more than €300 billion, and would affect Britain much more that the remaining EU states. It estimates that Britain’s GDP losses could reach 14 per cent if it had to leave the bloc.
“If the United Kingdom exits the EU in 2018, as a consequence of the House of Commons elections on May 7, 2015 and a subsequent referendum on leaving the EU, this would have long-term negative consequences for the country’s growth dynamic and economic vitality,” the report says.