Lagarde: "Spain's strong GDP is largely due to the contribution of foreign labor."

The president of the European Central Bank (ECB), Christine Lagarde, has highlighted the contribution of immigration to the strength of the eurozone labor market and has cited Germany and Spain as examples, and defended the independence enjoyed by central banks in a veiled reference to the open conflict between US President Donald Trump and the US Federal Reserve (Fed).

" Spain's strong GDP performance following the pandemic, which has helped sustain the eurozone aggregate, is also largely due to the contribution of foreign labor," he explained, noting that German GDP would be 6% lower than in 2019 without the contribution of foreign workers.

Speaking at the Jackson Hole Symposium on Saturday, Lagarde noted that foreign workers have accounted for half of job growth over the past three years and underscored the apparent strength of employment in both Europe and the United States despite the sharp rate hikes implemented by central banks to control inflation.

"It was reasonable to imagine that such a sharp adjustment in interest rates could lead to a rise in unemployment. However, the rise in prices has slowed abruptly at a surprisingly low cost in terms of employment. In the eurozone, job growth has been significantly higher than historical patterns predicted," he explained.

In this regard, he stated that in recent years the eurozone has shown increasing labor flexibility, with higher-than-expected employment increases and a limited impact on GDP.

Lagarde noted that foreign workers , who represented just 9% of the workforce in 2022, were responsible for nearly half of job growth over the past three years.

On the other hand, and in excerpts from an interview with the business division of the American network Fox that will be broadcast in full on Monday, without directly addressing the open conflict between US President Donald Trump and the Fed, he did want to emphasize that "the independence of any central bank is of crucial importance."

"I believe we all need to be accountable," Lagarde added, "and that we need to respond to all the questions raised by either the United States Congress or the European Parliament, but in any case, the independence of central banks is vital."

"The central bank becomes dysfunctional. It starts doing things it shouldn't. And the next step is disruption."

In this regard, Lagarde recalled that, during her time at the helm of the International Monetary Fund (IMF), she witnessed the consequences of central banks when their independence "is threatened."

"The central bank becomes dysfunctional. It starts doing things it shouldn't. And the next step is disruption. Instability, or worse," he said, before concluding that central bank independence is something "that should be left out of the debate."

The ECB president also addressed issues such as the importance of climate change and the current situation regarding Russian funds frozen in connection with the war in Ukraine.

In this regard, Lagarde insisted, as she has done on several occasions, that the concept of "climate change risk" must be taken into account "by central banks in their role as banking supervisors," and lamented that, in this regard, the United States Federal Reserve (Fed) has never fully decided on this issue.

Regarding the use of Russian assets to rebuild Ukraine in the post-war period, Lagarde explained that it is "not up to" her to order their execution, before indicating that Europe currently sees the priority as keeping the assets frozen, and that the interest they generate be used to support the Ukrainian authorities now.

"We Europeans are financing a large part of the support for Ukraine, and it is our job to defend democracy," he asserted.