SEB predicts mass migration from eurozone crisis countries
Robert Bergqvist, chief economist at Sweden’s SEB, has predicted mass economic migration from southern to northern European economies in the wake of the eurozone crisis and recession.
In an interview with Swedish wire service TT he said the forecast mass migration was based on the belief that the eurozone recession will be much worse than described by the European Commission this week.
The last eurozone recession in 2009 saw GDP fall -4.3% – the biggest fall since the depression of the 1930s.
Bergqvist does not think it will be as bad this time round. He believes the contraction will be about -0.8% in 2012, followed by growth of 0.7% in 2013.
However, that growth rate is poor when set against a rate of 2-2.5%, which would be expected during a normal period of growth. This suggests that the economic cycle of the eurozone will still be in a trough in 2013.
“Europe has entered a very difficult two-year period,” Bergqvist said.
Greece, which is in its fifth year of recession, will still be in recession in 2013, he added.
Bergqvist also warned that the measures adopted by the ECB to pump liquidity into the region’s financial system are leading to an ever greater proportion of sovereign debt actually ending up in banks. This is concentrating risk in individual member states’ financial systems, countering the perceived political objective of creating a more economically integration union. However, it is also having the effect of making it easier to handle future financial crises because it is cutting the risk of contagion.
Meanwhile, unemployment is being pushed up sharply by the ongoing crisis. As countries such as Greece and Spain struggle with unemployment greater than 20%, Bergqvist believes that a growing number of residents will move away from EU states around the Mediterranean.
He notes a similar trend has already occurred in Ireland, from where people have moved to the UK, Australia and the US.
Latvia has seen 10% of its population leave the country during the past three years of crisis, he added.
“I think we face a flood of labour moving north, from the area around the Mediterranean. The question is whether we in northern Europe have the capacity and tolerence required to take care of these people.”