The Benefits of Immigration

17th Jan, 2014

A new year is often associated with change and this one is no exception. As choruses of Auld Lang Syne rang out across the country to welcome in 2014, labour market controls on Bulgarian and Romanian migrants were lifted, granting citizens from these countries the same rights as other members of the European Union to work and settle in the UK.

Immigration is a near constant feature of the news cycle and one that resonates strongly with the public (the latest Ipsos MORI issues index shows that the public view immigration as the second most important issue facing the country, only behind the economy). In the political sphere concerns about immigration have helped UKIP surge up the polls and seen David Cameron pledge to cut net immigration to fewer than 100,000 per year (in 2013, it stood at 183,000).

Much of the immigration debate focuses on the ‘costs’ of immigration, with headlines and articles commenting on benefits and health tourism – and prompting further political pledges on extending the period of time a new migrant must be in the country before they are able to claim any state benefits or support.

With this the dominant theme of the narrative, it was interesting to hear the Chairman of the Office for Budgetary Responsibility, Robert Chote, speak this week on the long term economic benefits of immigration. Chote estimates that if immigration declines in line with government targets then by 2062 national debt will be 20% higher than if it maintains its current level. The reason for this is straightforward – migrants tend to arrive at working age (and looking for work) and often retire to their home countries – meaning the ‘cost’ they actually have on the UK, in terms of their use of public services is actually very low. Equally, a recent study from the National Institute of Economic and Social Research found that such a reduction in net migration would mean total GDP would be 11% lower, and net wages 3.3% lower than they would be if immigration maintained its current levels. A refreshing and often overlooked argument – something we at Trajectory always welcome.