European Bank Credits Immigrants on Economic Recovery

Inflation eased while growth continued, Christine Lagarde says
By Newser Editors and Wire Services
Posted Aug 23, 2025 2:30 PM CDT
Foreign Workers Helped Economy: European Bank
Federal Reserve Chairman Jerome Powell chats with Kazuo Ueda and Christine Lagarde outside Jackson Lake Lodge during the Jackson Hole Economic Policy Symposium in Moran, Wyoming, on Friday.   (AP Photo/Amber Baesler)

A jump in the share of foreign-born workers after the pandemic helped Europe bring inflation down without sharply slowing growth, the president of the European Central Bank said Saturday. A key factor "has been the rise in both the number and participation rate of foreign workers," Christine Lagarde said in a speech in Jackson Hole, Wyoming, at a Federal Reserve economic symposium, the AP reports. "In Germany, for example, GDP would be around 6% lower than in 2019 without the contribution of foreign workers."

Spain's strong post-pandemic economic growth "also owes much to the contribution of foreign labor," Lagarde said. The comments echoed a common view among economists that an influx of foreign workers helped companies expand their output and meet a spike in demand after the pandemic that followed stimulus benefits. The increased supply helped bring down inflation in Europe and the US. Yet the rise in immigration also sparked a political backlash in both economies. "Migration could, in principle, play a crucial role in easing" labor shortages as native populations age, Lagarde said. But "political economy pressures may increasingly limit inflows."

While foreign born workers accounted for just 9% of the EU's labor force in 2022, they have made up half of the bloc's labor force growth in the past three years, Lagarde said. More elderly people also joined the workforce, Lagarde noted. Without that increase, the unemployment rate in the 20 countries that use the euro currency would be elevated—6.6%, rather than the current rate of 6.3%, she said. Kazuo Ueda, governor of the Bank of Japan, spoke on the same panel at Jackson Hole and noted a similar trend in Japan since the pandemic. While the foreign-born make up just 3% of the workforce, they have made up half of recent workforce growth.

Read These Next
Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X