While Europe’s economy and capital markets have been spared any major shocks in the past year, and in fact European GDP has been on a surprisingly resilient uptrend in recent quarters led higher by the relentless German export-growth dynamo (courtesy of the very, very low Deutsche Mark and a lot of broke Greeks), an old and recurring problem has re-emerged, one which threatens the stability and cohesion of the European Union itself: the latest surge of refugees which, arriving mostly from North Africa in recent months, has made Italy its primary landfall target resulting in a surge in migrant arrivals on Italian shores. However, with the rest of Europe largely shutting its borders to this refugee influx forcing Rome to deal with what many in Italy see as an unwelcome presence, a distinct sense of bad-will has been floating around Europe in recent months as Rome’s pleas for more solidarity from its European peers have been stubbornly ignored. Meanwhile, Italy has accepted nearly 100,000 refugees in the first six months of the year and the number is rapidly rising.
Now, a new report issued by Goldman Sachs will likely pour even more gasoline on the fire, as it finds that just as Rome alleges, “Italy has the lowest capacity to absorb migrants among the major EU economies. This is measured using three indicators of integration: (1) economic integration; (2) social integration; and (3) policy effectiveness.”
While hardly new for regular readers, this is how Goldman lays out the problem:
This post was published at Zero Hedge on Aug 22, 2017.