In recent history, Europe has seen wave after wave of migrants and refugees. Much of the migration initially came from North Africa, where many European countries had their former colonies. Later on, the migration came from the other parts of Europe itself, some from Eastern Europe. More recently, the migration has been from the Middle East and Africa. The arrival of so many migrants into Europe has changed some realities on the ground. Bouchard Fintech has taken a closer look at these changes the possible impact these events might have.
The arrival of so many people has placed added burdens and stress in the host countries. The new arrivals need housing, clothing, medical services, education, financial support, training and much more. Their swelling numbers have impacted nearly all aspects of life in the host countries. While for some in Europe the migrants have been welcomed, for others they view them with disdain, concern or even fear. Their very presence has altered the demographics and even the politics of the host nations.
The analysis by Bouchard Fintech shows a worrying trend. With such large numbers already present and millions more that are trying to get into Europe, the pressures continue to mount. Large portions of the population appear to favor setting limits to how many people can be allowed to come in.
Aware of the problems, the European Union has made multiple deals with other countries to try and stem the migration wave. Notably, the European Union struck a deal with Turkey whereby migrants trying to get into Europe via Turkey are stopped or turned back. This deal with Turkey is reportedly costing the European Union some six billion euros per year. This arrangement with Turkey is already strained as relations between Turkey and certain European countries is deteriorating. With that in mind, it is possible that Turkey may decide not to cooperate with Europe anymore and end up allowing millions of migrants to cross its territory into Europe.
The mass migration has had multiple impacts on the lives of the citizens. It has also brought about a shift in politics. For many, in Europe, these migrants are being seen more as a threat to a previous way of life. The citizens of Europe are showing more protectionist sentiments and are displaying more ethnic and nationalistic pride. There are active anti-immigration groups and growing demands for far stricter measures.
In the UK, the anti-immigration feelings are credited with tilting the vote in favor of Brexit. In other parts of Europe, notably in the heart of Central Europe, there are more right-wing movements and political parties. Politically, nationalists and populists are making huge strides with the electorates.
Europe is already facing many challenges and the economy is front and center. With more and more migrants arriving, the financial troubles get compounded. Already we see coalitions, within Europe, begin to falter. Member states that were working on common economic issues have found their regional support weakened.
Some countries, including Greece and Italy, continue to struggle with the large numbers of migrants that are coming to them from across the sea. Interestingly, these countries have serious economic problems to deal with. They also have significant numbers of voters who are anti-immigrants and/or extremely nationalistic and/or Euro skeptics. Another shock in Greece might fracture their fragile economy and plunge them back into more years of financial woes. In Italy, the national debt is one of the highest in Europe. Italian banks are considered debt-heavy. As such, any added problems in Italy, including from large numbers of migrants, might simply be too much for the economy to handle.
Simply put, the situations in many parts of Europe is quite fragile. Any additional stress might harm the European economy and may bring about new financial waves. The euro could be hit with more uncertainty and see a notable drop in rates against other currencies. Business leaders, financial investors and traders would do well to bear the above factor in mind and prepare themselves and their organizations for the possible financial shocks.
This article was researched and written by Bouchard Fintech.
