Asylum applications to the European Union (EU) set an all-time record in 2015, more than doubling the 2014 figure, according to EUROSTAT. After the recent agreement between Turkey and the EU, the influx of refugees is expected to decrease significantly.
However, host countries need to deal appropriately with refugees already in the continent. In the short term, major host countries such as Germany or Sweden should be able to support newcomers with a relatively moderate fiscal expansion. On the long term, the challenge lies on successfully integrating refugees in the labor market. The sooner this happens, the more they will help public finances by paying income tax and social security contributions while also helping counter some of the adverse fiscal effects of population aging.