While the short - term economic consequences of Brexit are not to be dismissed , it is the impending failure of the European project that should provoke the bigger sense of concern . The EU ‘ s two biggest achievements since the establishment of the single market -- the euro and border - free travel -- are both under threat . These implosions would be a magnitude more painful than the British vote . The two are closely linked . European governments realized in the 1980 s that competitive currency devaluations were hindering the single market , which was supposed to bring more industrial specialization and economies of scale . A single currency , they hoped , would put an end to that game , bring low German interest rates to all and enable national governments to reduce deficit and debt levels , as enshrined in the Maastricht criteria . But there would be a cost : Respecting these rules would create political pain as parts of the labor force were displaced . That is where the 1985 Schengen Agreement came in . The pain of fiscal restraint and adjustment would be eased by promoting free movement . People might lose their jobs in Fiat , but they could go and work in the Ruhr . The single market had already enshrined this freedom , but Schengen made it truly palpable by removing border controls . Over time , cross - border trade , tourism and labor mobility increased markedly as a result . The freedom to retire , go on holiday or study in another EU country created important political constituencies in support of Europe . As Eurobarometer polls consistently showed , border - free travel was hugely popular . Both the euro and Schengen are now on life support . Schengen has been unravelling for a while , under the strain of uncontrolled immigration from outside Europe and from the threat of terrorist attacks . Without Schengen , the European project loses a sense of common destiny , an aura of plausibility and a great deal of the cachet it held , particularly for the young . It is no longer possible to have “ just ” freedom of movement without borderless travel as it will now feel to Europeans as if a crucial freedom has been taken away . The potential demise of Schengen has undermined support for the EU as a whole , and that in turn has compounded the problems faced by the euro -- recently described by the normally cryptic Alan Greenspan as vulnerable . Even that was an understatement . The European Central Bank has been all but screaming that monetary policy alone can buy time , but not hold the unfinished eurozone together forever . Germany , the ECB ’ s largest shareholder , has watched successive rounds of quantitative easing with concern . Meanwhile , other eurozone economies have suffered under Germany ‘ s large current account surplus , so large that the country received a warning from the U . S . Treasury as a potential currency manipulator . The high youth unemployment in southern countries and the lack of income on the savings of the elderly in Germany are a dangerous political cocktail . Uncontrolled waves of migration have only enhanced the sense that countries need to , as the Brexiters had it , “ take back control . ” Across Europe , political parties surfing of this wave of discontent are increasing in popularity and openly calling for an end to euro membership . Strengthening both Schengen and the euro -- or at least preventing their demise -- is not impossible . Better control of external borders and more robust intelligence sharing would make border - free travel safer and more defensible from a security perspective . But , crucially , there will also have to be less generous social benefits for those who have not contributed to the system , something Denmark ’ s prime minister mooted on Thursday . That may be politically controversial , but it is possibly the only way to hold on to the social - democratic welfare models without creating an irrepressible appeal for poor migrants . Removing the euro ‘ s vulnerabilities ultimately requires the kind of fiscal policy - sharing that EU countries have resisted . But even without that , there are ways to use the single currency to boost growth . Rather than subsidizing corporate bonds , stock buybacks and social security programs , the liquidity provided by quantitative easing should be allocated for investment , which would create both jobs and opportunities for growth . Europe has made noises in that direction with its Investment Fund , but the resources dedicated to the effort ( and the results so far ) are paltry . If it can ’ t fix its flagship projects , the EU will face far more upheaval than simply a British vote to leave . By Jean - Michel PaulJean - Michel Paul is founder and chief executive of Acheron Capital in London . -- Ed . Bloomberg <ⓒ KoreaHerald ( www . koreaherald . com ) 무단 전재 및 재 배포 금지 >