December 29, 2023 - 11:00am

“I can even picture a cultural and economic renaissance similar to the one in the decades prior to the beginning of World War I.” Those were the words of Deutsche Bank Chief Economist David Folkerts-Landau at the height of the 2015 refugee crisis. Refugees were “the best thing that has happened [to Germany] in 2015”, he continued, arguing that mass migration would be the key to boost the country on the global stage. 

Not much has been heard from Folkerts-Landau since, most likely because neither Germany nor Europe have reaped the rewards of migration he promised. On the contrary, a number of empirical studies seems to show that the exact opposite is happening, and that instead of a renaissance, mass migration has become an economic burden.

A team led by mathematician Jan H. van de Beek at the University of Amsterdam estimates that the Dutch government spent approximately €17 billion per year on migration in the period between 1995 and 2019, meaning that more than one billion euros went to migration-related issues every month. 

The study digs deeper still: annual net costs of non-Western immigration amount to €17 billion and the annual net benefits of Western immigration total one billion euros. Distinguishing between Western and non-Western migration patterns, the study comes to a startling conclusion: if immigration remains at 2015-2019 levels, the annual budget burden will increase from €17 billion in 2016 to about €50 billion. This is an increase that the welfare state would most likely not survive.

The Dutch findings are mirrored in a similar study conducted by the Danish Finance Ministry, which concludes that non-Western immigrants are most likely to remain lifelong recipients of public finances compared to their Western or native Danish peers. Meanwhile, the picture in Germany is not much different: about 45% of those who receive unemployment benefits are not German citizens, costing the taxpayers around €20 billion per year. Austria shows similar numbers, with almost 60% of recipients having a “migrant background”.

Van de Beek sees parts of the problem in the structure of the welfare state, which creates the wrong incentives for newcomers. The European experience with Ukrainian refugees provides some evidence for this view: if access to government-paid services is too easily available, it discourages migrants from looking for work, regardless of their country of origin. In some European countries, immigrants are well-integrated into the labour market: 70% in Denmark, 60% in Poland and the Czech Republic, and 50% in the Netherlands, UK and Ireland. But in others, such as Germany and Austria, the number remains below 20%.

The emerging picture is a complex one that includes both cultural and economic factors, but the overall conclusion remains the same: the current conditions under which migration to Europe takes place are not sustainable and will bring the welfare systems ever closer to collapsing. The idea promoted by Folkerts-Landau and others turned out to be far too optimistic, and what makes matters worse is that politicians still refuse to face the facts. 

Placing one’s head in the sand is, unfortunately, not the same as actual policymaking. Europe has ignored these issues for too long, and voters will make their discontent heard at the voting booth.