Why migration is necessary to unlock European growth
The “European model” that has provided security and prosperity across the continent has, for the first time, found itself seriously questioned by a combination of political, economic and fiscal threats. Welfare models across Europe are seen as no longer sustainable.
Flows of migrants have accelerated to crisis point. Support for right-wing and nationalistic parties has grown across the continent.
With economic recovery remaining weak, and talk of “Grexit” and “Brexit”, the Europe of today is under serious threat.
Russia’s actions in Ukraine and Syria have raised serious questions about Europe’s security. EU leaders are now looking for alternative energy suppliers as Russia becomes an increasingly unreliable partner.
Stability is key and there are long-term opportunities that could aid growth.
For example, just as Europe’s population ages, it is experiencing a surge of immigration. This migration, and the inflows of hundreds of thousands more fleeing war, has placed an immediate economic and humanitarian burden primarily in southern Europe.
Read more: UK financial firms say cutting skilled migration will hurt the economy
Yet long-term, migration is forecast to act like a shot in the arm to many European economies, particularly Germany, which accounts for nearly 30 per cent of Eurozone GDP.
With Germany’s labour force expected to decline by nearly a third by 2050, migration will act as a major growth driver. It is a similar story in Italy and Portugal.
In energy too, the jolt caused by increasing tensions with Russia, has forced the EU to seek new partners and has led to an acceleration in the shift to renewables.
But what of economic growth itself?
There are four key policy areas that offer the greatest potential to unlocking European growth: increasing service sector productivity, labour market reform, the introduction of a fiscal union, and the creation of a digital single market.
Robust regulatory frameworks are necessary if Europe is to reignite growth but innovation remains the great growth driver. This is where European businesses should lead by providing stability. They must play an active role in driving forward the four key policy areas, providing leadership and cooperation with policy makers whenever possible.
Design and innovation embodied in digitalisation, robotics, big data additive manufacturing, bio- and nano-technologies offer huge potential.
Read more: Canada has lessons for Britain on migrants
Technologies such as collaborative robots and 3D printing will eventually replace conventional manufacturing operations and transform the traditional factory model.
Some EU countries, like Germany, have recognised the vast potential. Its car manufacturers such as BMW and Daimler are about to introduce collaborative robots at large scale to replace final assembly activities currently completed by hand.
With the global market for this technology currently growing at an annual rate of 20 percent, and worth up to $50bn by 2050, this is an area that Europe can ill afford to ignore.
Striking a proper balance between the EU’s core principles and resolving economic, fiscal and political challenges will remain central to the ongoing story of the European project.
It is incumbent on business leaders and policymakers to work together and take bold steps to make the EU as dynamic and strong as possible.