IImagine if, during the election campaign, Rishi Sunak announced that he expected immigration to boost economic growth by 2038. Population: 3.7 million – That’s more than the number of people currently living in Wales. How would you respond?
It’s a question worth asking, because this is exactly what we’ve seen since David Cameron promised in 2010 to reduce annual net immigration to the tens of thousands. In the current parliament alone, Net immigration to the UK is 2 million.
One answer would be that Britain’s history has been shaped and enriched by immigration, so it makes sense to continue with a liberal response. Another answer is that the economy is too dependent on overseas workers, and without them the NHS and social care would collapse. Universities that rely on foreign students are more likely to be reluctant to accept them because they pay higher tuition fees than UK-born students. Economic crisis.
But many will naturally want to know whether there is a plan to deal with a population growth equivalent to the combined population of Edinburgh, Leeds, Sheffield, Nottingham, Stoke, Bristol and Cardiff in a relatively short period of time. What impact will this have on housing supply, rents in big cities and school capacity? What effect will it have on NHS waiting lists and whether an influx of foreign-born workers will drive down wages?
These are natural questions, asked not only in the UK but in other developed Western countries as well, namely the rest of Europe, North America and Oceania. The UK is no exception, given its large foreign-born population. Indeed, the UK Moderate For high-income countries.
However, large-scale immigration Relatively recent For the UK, more people left the country than moved in almost every year between the end of the second world war and the early 1980s, and it is only in the last 25 years or so that net migration has increased and become very important to the economy.
Initially, most of the new arrivals came from elsewhere in Europe, but there was a notable increase after the accession of the former Soviet Union’s eastern European countries in 2004, then a second surge around the time of the eurozone crisis in the early 2010s, and a strong rise again after the pandemic. However, since Brexit, the pattern has changed: the number of EU workers has fallen, but this has been more than offset by arrivals from other parts of the world.
Net immigration also had benefits: highly educated and skilled workers from Eastern Europe added to Britain’s human capital stock. They boosted growth and helped fill gaps in the job market.
Ashley Webb, a British economist at Capital Economics, said the increase in labour supply since the start of the pandemic has mainly been due to net migration from outside the EU, and that future net migration would ease labour shortages and put downward pressure on inflation.
“Between the fourth quarter of 2019 and the first quarter of 2024, the workforce grew by just 200,000. Of that, the number of non-EU born people willing and able to work increased by around 1.5 million, while the number of EU and UK born people fell by around 200,000 and 1 million respectively. Moreover, for the first time since the data series began in 1997, the inactivity rate of non-EU born people is lower than the inactivity rate of UK born people,” Webb says.
Mr Webb is right to point out that net immigration will solve some of the short-term problems – whether it is good for the UK in the long term is another question.
First, what matters is not the size of the economy measured by gross domestic product, but the size of the economy divided by population. Gross domestic product per capita has fallen. 1.2% increase From the end of 2019 to early 2024.
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Net immigration has done nothing to reverse the downward trend in GDP per capita since 2010. In fact, cheap labor may discourage businesses from investing in new capital that would lead to higher productivity and income growth.
Then there is the housing problem, or rather the housing shortage. In recent years, housing supply has simply not kept up with demand, leading to rising property prices and soaring rents. Population growth is one of the reasons why many young people rely on their parents’ loans to buy their first home, or live with them in their late twenties and early thirties. These pressures will continue even if the Office for National Statistics’ assumption that net migration will level off by 2020 comes to fruition. Average 315,000 This will prove accurate over the next few years.
But that doesn’t mean it will be easy for Britain to escape the trap of high immigration and low productivity. It will take more than a focus on attracting the best and brightest, and a cap on the number of people allowed into the UK each year. It will also require recruiting far more British-born doctors, nurses and carers, and paying them the competitive salaries they deserve.
During the election, a focus will be on how to stop boats from crossing the Channel despite legal immigration far exceeding capacity. Illegal immigrationBut the reality is that mass immigration is being used to mask the cracks caused by austerity and to perpetuate otherwise unviable business models in sectors like hospitality and higher education. Large-scale immigration without an equally large investment in infrastructure to cope with the pressures it brings is a recipe for disaster.
