June 27, 2017 / 10:13 AM / 6 months ago

Germany can jump growth hurdle courtesy of Brexit

LONDON (Reuters Breakingviews) - Britain could be handing Germany the gift of stronger growth. A scarcity of skilled workers risks slowing the pace at which Europe’s biggest economy can expand. One way to plug the gap is to attract workers who no longer feel welcome in the United Kingdom after its vote to leave the European Union.

German, British and European Union flags fly in front of the Reichstag building in Berlin, Germany July 20, 2016. REUTERS/Hannibal Hanschke/File Photo

After more than a decade of strong growth and rising employment, German companies are struggling to hire qualified workers. A record 1.1 million jobs were vacant in the first quarter of 2017, 40 percent more than five years earlier, data from think tank IAB shows. A persistent skills shortage would reduce the maximum sustainable rate at which the economy can grow in the long term from 1.4 percent to 1.2 percent by 2019, the German central bank said on Monday.

True, more than 1 million migrants entered Germany in 2015 after Chancellor Angela Merkel threw open the borders to war refugees. But only half of these newcomers have the skills to find work in the coming five years, IAB economists predict. Workers from other European countries may slot into jobs more easily.

The number of EU citizens employed in Germany has already more than doubled over the past decade, to 1.8 million, or 6 percent of the workforce. If British Prime Minister Theresa May cuts EU migration as sharply as she has promised, many of the 250,000 or so European workers who move to Britain each year will look elsewhere for work. Germany, whose unemployment rate has fallen to 5.7 percent, its lowest since reunification in 1990, is an obvious alternative.

Even before Britain leaves the EU, applications for UK social security numbers from eastern European countries have fallen to their lowest level since 2004, according to the University of Oxford’s Migration Observatory. By contrast, there were 15 percent more workers from these countries in Germany in March than a year ago. Berlin could do more to encourage such inflows, for example by subsidising language training and running hiring campaigns in other European countries. Germany is already trying to persuade British bankers to move to Frankfurt. By rolling out the red carpet for Polish plumbers, Spanish engineers and Romanian nurses too, the country can make the most of Brexit.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below