Article

Rising migration on both sides of the Atlantic

In recent years, both the US and the European Union have experienced substantial levels of legal migration, illegal entry and asylum applications. This has political consequences.

| 6 min read

The rapid pace of change of immigration levels has created has worried substantial numbers of voters, concerned about the impact large numbers have on housing availability and cost, on public service provision, and on the wider community.

As a result, both the US and EU authorities have sought to impede or send back some of the illegal entrants and have changed policies over how people can arrive and settle legally. The issue of numbers and the effectiveness of border control has become an important issue between candidates Donald Trump and Joe Biden in the US Presidential election. It has seen anti-migrant parties in the EU attract more support in this weekend’s European elections.

The economic impact of more migration

There is a major political disagreement between parties that favour more economic migrants and welcome asylum seekers, and the parties that want to control numbers. The supporters point out that more migrants will swell GDP as they take new jobs and spend money on their living costs. Legal migration into jobs can tackle shortages of skilled people or scarcity of people willing to take lower paid jobs.

The migrants take an above-average share of jobs like domestic service, construction, care roles and lower paid farm work, easing recruitment difficulties. There are also examples of higher-qualified migrants tackling shortages for medics or other skilled occupations. Countries allowing in more migrants should grow faster owing to population growth and have less friction in adjusting employees to jobs.

The opponents argue that as there is a concentration in lower-paid areas there will be a proportionately greater strain on public finances as low-paid people qualify for more welfare and free public services and may need help with housing. Allowing in more low-paid people may deter businesses from making investments in productivity raising machinery and computers, leading to more sluggish productivity and fewer real pay advances. Too rapid a growth in total population requires more money to be spent on providing basic services from energy through water to roads and transport, increasing the strain on public finances.

The EU experience

Of the EU’s 448 million people, 42 million were born outside the bloc, with 5% of the EU’s workforce coming from abroad. In 2023, there were 385,000 irregular border crossings into the EU. In 2022, seven million people entered the EU and 2.7 million left, leading to a net migration figure of 4.25 milion. This decade has seen large migration from Ukraine as a result of the war, followed by substantial numbers of Syrians and Afghans. In 2023, 27% of irregular border crossings were people from Syria. 3,105 people lost their lives in small boats trying to reach EU shores last year.

The exit polls for the EU elections showed National Rally in the lead in France, the AFD in second place (16%) in Germany, and the Brothers of Italy in top position in Italy. These three parties all wish to see a major reduction in migration but have other differences.

The Brothers have become a governing party in Italy and have toned down their rhetoric. The AFD in Germany has been ejected from the right wing Identity and Democracy Group for their views, whilst National Rally continues to moderate its remarks to attract more support. There are a number of other parties that regard getting migration down as essential. In the Netherlands, Geert Wilder’s party gained seats in the EU elections though fell short of their success in the last general election.

As Ursula Von Der Leyen seeks to keep her job as European Commission President, she may well offer further strengthening of EU border controls in response to the electoral mood. She is unlikely to construct an alliance of the more anti-migrant parties to sustain her, but will need to take their views into account as they are also affecting the centre right parties to which she belongs.

The EPP grouping she comes from is the largest minority bloc in the new Parliament. She will look to attract support from the centre left, the centrists and liberals to secure a majority to support her and her policies.

The US experience

US numbers of migrants have been elevated this decade under President Joe Biden. The southern border has been under particular pressure, led by Mexicans but also experiencing large numbers of Venezuelans, Guatemalans and Cubans. The US has also attracted a large number of Middle Eastern travellers from Syria and Afghanistan.

In 2023, the US Customs and Border Protection Agency reported 3.2 million encounters with people it needed to appraise. Numbers coming across the Mexican border have quintupled compared to the Trump years. Mr Trump demands more action to control these arrivals and to deport the illegals. President Biden has shifted his ground, resuming the construction of some more border wall. He is strengthening staff numbers and other border protections and seeking to return more illegals. He has also encouraged the use of a sponsors’ programme and an app allowing migrants to book interviews to switch some from illegal entry to legal.

In the US, as in the EU there is a significant bloc of voters who want numbers down who are exercising leverage over the politicians. How President Biden handles this is going to be an important influence on the election results.

The immediate fall out of the EU elections will be a general election in France.

There will be further moves to restrict legal migration and to crack down on illegal movements on both sides of the Atlantic. This is driving politics rightwards and reinforcing trends away from globalisation. To the extent that it succeeds in reducing migrant flows it will act as a stimulus to productivity enhancing investment. It will reduce growth rates of GDP pre adjustment for population and make filling some vacancies more difficult.

The immediate fall out of the EU elections will be a general election in France. President Macron wants more support from Parliament and hopes the two-stage contest will mean a majority in each seat get behind the candidate best able to beat the National Rally candidates. He must deal with a National Rally party that is currently more popular.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Rising migration on both sides of the Atlantic

Read this next

The market implications of a Labour government

See more Insights

Read our latest UK market commentary and global investment news.

Article
China’s central bank criticises Fed policy
By Charles Stanley
20 Jun 2024 | 16 min read
Article
G7 backs Ukraine and tackles migration
By Charles Stanley
17 Jun 2024 | 6 min read
Article
Tariff wars over electric cars
By Charles Stanley
14 Jun 2024 | 7 min read
Article
Major elections and markets
By Charles Stanley
06 Jun 2024 | 7 min read