Hosting Ukrainian refugees could cost EU over €40 billion euros

More than four million refugees have arrived in the EU since Russian troops invaded Ukraine; millions more could soon arrive. The costs of hosting them could surpass €40 billion this year, according to a recent estimate by a Brussels economist.

Hosting millions of Ukrainian refugees could cost EU countries €43 billion in 2022, according to estimates from Zsolt Darvas, an economist of the Brussels think tank Bruegel.

The estimates are based on the assumption that the total number of refugees to relocate from Ukraine to the EU will be 5.7 million and that two-thirds of them will require state support for nine months on average

These costs will likely be borne mostly by the four EU members bordering on Ukraine, Darvas wrote in a post shared in the Bruegel blog last week. Specifically, he estimates that the costs will be "€21 billion (3.3% of GDP) for Poland, €5.4 billion (2.1%) for Romania, €3.3 billion (2.0%) for Hungary and €2.5 billion (2.4%) for Slovakia."

The unequal distribution of the costs for Ukrainian refugee reception means that at least some should be shared, Darvas said, and thus it would be a good idea to set up a new EU fund.

More than €10 billion from EU for Ukraine refugee hosting

The Bruegel economist noted that the EU had already mobilized funds not yet spent from the EU budget for the Ukrainian refugee crisis (€420 million for host countries) and that €10 billion from EU Next Generation had been reallocated to support the refugees -- but that the funds mobilized did not nearly reach €43 billion.

Darvas did not estimate potential the long-term costs of hosting Ukrainian refugees, if the war were to last a long period of time, but noted that "as refugees start working, they require less public support and pay tax into public budgets."

According to the economist, research suggests that "over a decade or so, the net fiscal impact of refugees is close to zero or even positive, depending on the characteristics of refugee populations, skill complementarities and the efficiency of national institutions in terms of integration." He suggested that the integration of refugees into host societies and the labor market should be facilitated with policies supporting training, such as language classes, and quick processes for skill certification.