Brexit to boost CEE's GDP as migrants "boomerang" home

Brexit to boost CEE's GDP as migrants
Warsaw is one of the CEE cities that could benefit from the return of migrants from the UK.
By Clare Nuttall in Bucharest September 12, 2017

The return of citizens to Central and Eastern Europe (CEE) after the UK’s planned 2019 exit from the EU will hike GDP across the region and provide a corresponding boost for local real estate markets, a new study by Colliers International finds. 

The EU member states of CEE currently have a 7mn strong diaspora, with the largest numbers of expats working in fellow EU member states in Western Europe. This has contributed to the tightening of labour markets across the region and is estimated to have constrained economic growth. 

Colliers has, however, concluded: “We believe that the emigration wave has peaked and that workers will start to return eastwards to CEE-6.” Its report covers the Visegrad 4 countries of Czechia, Slovakia, Poland and Hungary plus Romania and Bulgaria. 

Ahead of Brexit, scheduled for March 2019, the British pound is weakening, which, Colliers anticipates, will "prompt a wave of workers in Western Europe to return to CEE-6 countries". 

“The upsides are likely to be higher demand for office and industrial real estate space as indigenous workers return eastwards; as well as filling the skills gaps that these workers created by seeking work in the West,” Colliers forecasts in its report, entitled “Labour Force Boomerang”, published on September 11. 

 “[A] combination of wage rises; low taxes; better governance and legal frameworks; more modern education systems; a more familiar cultural milieu and encouragement from governments could well be 'pull' factors to encourage those who have migrated to return,” commented Peter Leyburn, EMEA director of client services at Colliers International. 

“This market dynamic, termed the 'labour force boomerang', is likely to translate into increased investment interest, provided that worker productivity can keep pace with Europe. This should mean higher demand for office and industrial real estate space and increased retail spending.”

The UK is currently home to a sizeable share of migrants from the CEE region, including 40% of all the Slovaks in Western Europe, equating to 1.7% of Slovakia’s population. Also, some 34% of Poles in Western Europe, 24% of Czechs and 20% of Hungarians also live in the country. 

Aside from Brexit, Colliers’ research also finds new “pull” factors in the CEE countries, as tighter labour markets push wages up, and negatives such as corruption and political instability lessen. At the same time, governments across the region are trying to entice back emigres, with Slovakia and Hungary in particular driving these efforts.