Is Europe’s economic resilience a case of open borders over austerity? According to European Central Bank President Christine Lagarde, a post-pandemic surge in foreign-born workers has helped the continent avoid an even bleaker growth scenario. Without immigrants, Germany’s GDP would be 6% lower than in 2019, and half of the EU’s labor force growth since 2022 comes from these workers—despite making up just 9% of the labor force.
Lagarde highlighted during the Jackson Hole symposium that immigration has helped tame inflation and avoided the harsh recessions typically triggered by rapid rate hikes. Spain's robust rebound is another example—"also owes much to the contribution of foreign labor." But, can this growth continue if political backlash shuts the door? Net immigration offset population declines, pushing the EU to a record 450.4 million people last year, as the rise of populist parties pressures governments to restrict inflows.
