SBA: Slovakia’s exit from the EU would have a devastating impact on the economy

Bratislava – Slovakia’s membership in the European Union (EU) and the eurozone has brought the country economic stability, a higher standard of living, security, and freedom of movement. Since joining the EU in 2004, Slovakia has received more than 24 billion euros from EU funds to support the development of various areas. Therefore, the Slovak Banking Association (SBA) considers discussions about the potential exit of Slovakia from the EU as extremely dangerous, as such a step would have devastating effects on the economy, informs TASR.

According to the SBA, following the exit from the union, economic chaos, instability, a dramatic currency drop, skyrocketing prices, and a declining standard of living would follow. “Not to mention the non-financial damages that Slovakia’s possible departure from the European grouping would cause. Deviation from European values, slowed convergence, limited study opportunities for the young or work abroad, etc. After all, the example of Great Britain very clearly shows us the consequences and disruption of stability that such a step may entail,” assessed SBA’s president Daniel Kollár in a statement on Tuesday.

The association recalled the 2023 estimates from the National Bank of Slovakia (NBS) that the annual benefits of Slovakia’s EU membership in the form of direct payments, indirect economic benefits, and lower debt servicing costs are approximately at the level of 4% of the gross domestic product (GDP). In nominal terms, this represents an amount of 830 euros per capita annually. According to the NBS study, Slovakia’s economy is traditionally very open and can therefore significantly benefit from the EU’s single market. The central bank estimates a related long-term benefit at the level of 15% of GDP.

“The reintroduction of tariffs and non-tariff barriers would affect Slovakia significantly more than other EU countries. Slovakia would have to renegotiate new agreements not only with the EU but also with countries outside the union. This would most likely lead to much less favorable agreements, tariffs, and barriers, which would further harm the Slovak economy,” emphasized the SBA.

The actual exit from the EU would also have to be preceded by leaving the eurozone and giving up the common European currency, warned the association. According to them, the return to the national currency would lead to a dramatic drop in its value and the onset of high inflation, which would negatively impact Slovaks’ purchasing power and standard of living. “The central bank’s response to rising inflation would be to increase the base interest rates. This would also result in higher interest on loans and negatively impact corporate sector investments,” assessed the SBA.

“Given the aforementioned negative impacts, which could have disastrous consequences for our country, the SBA calls on the creators and participants of public discussions about the potential withdrawal of Slovakia from the EU or eurozone to not continue such debates without proper facts and warnings of potential consequences. Citizens of Slovakia, who are also bank clients, must be thoroughly informed about the serious economic and business risks associated with this possible scenario,” added Kollár. (February 4)