European Central Bank President Christine Lagarde has said that Europe’s economic growth has been built on immigrant labor, but the rise of populists could end it, Politico reports.
Speaking to the US Federal Reserve’s annual symposium on the 23rd of August, Lagarde said that it was the foreign workforce that had helped the eurozone weather repeated economic shocks, such as inflation and rising energy prices, while continuing to grow and preserve jobs. The number of people employed in the bloc increased by 4.1% between 2021 and 2025.
Lagarde told bankers that although they made up only 9% of the total number of employees, foreign workers generated half of the economic growth in the last three years. She added that without immigrants, labor market conditions would be more difficult and growth would be lower.
The ECB president singled out Germany and Spain for special mention. Without the immigrant workforce,
Germany’s GDP would be 6% lower today,
and Spain has been able to recover successfully thanks to migrants.
Lagarde also said that migration plays a key role in offsetting Europe’s declining birthrate and satisfying Europeans’ desire to work shorter hours.
At the same time, Lagarde acknowledged that politics cannot be ignored. Immigration is set to increase the European Union’s population to 450 million by 2024, despite governments from Berlin to Rome trying to limit new arrivals and voters turning to far-right parties in droves. Lagarde said migration could play a key role in addressing labour shortages, given the ageing local population, but political pressure could increasingly limit the flow of immigrants.
Lagarde warned that despite the current successful situation, there is no reason to assume that this dynamic will continue, and an aging population, political resistance and labor choice issues could threaten the resilience of the eurozone.
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