OBR: Immigration Vital for Growth

HAMISH_MCTAVISH

George Osborne's economic strategy rests on continued high levels of immigration to Britain – in contrast to the Conservatives' policy of cutting net migration down to the "tens of thousands".

The Government will find itself in the position of either having to allow continued immigration in the hundreds of thousands or jeopardising the country's economic recovery, according to its own fiscal watchdog, the Office for Budget Responsibility.

Ministers will not reduce average annual immigration down to the "tens of thousands" over the course of this parliament according to the OBR's projections. Instead, net inward migration to Britain will remain at an average of 140,000 a year until 2016, it says, despite repeated promises from Conservative ministers that they will reduce immigration flows to substantially below these levels.

If ministers were to succeed in reducing immigration down to their target, the UK's growth would be damaged, the OBR's economists believe – acknowledging the role that immigration plays in Britain's economic health. The forecast is embarrassing for David Cameron and the Home Secretary, Theresa May, who have repeatedly insisted that the Tory manifesto pledge will be met.

The OBR said: "Our assumption for population growth is based on average net inward migration of 140,000 per annum over the forecast period [2011-16]." Net migration to the UK in 2010 was 252,000, according to the Office for National Statistics, the highest level on record.

Tory ministers have consistently stressed that their objective is to bring down net migration to Britain to "tens of thousands" a year before the end of this parliament. Mr Cameron reiterated this objective in October.

The Home Office argues that, since the OBR's 140,000-a-year net migration figure is an average over five years it is consistent with immigration levels dipping below 100,000 in future years of this parliament. But the average flows over the parliament would still be considerably in excess of ministers' targets. And the OBR's estimate – which it first made in June 2010 – has not changed despite the immigration control measures introduced by the Coalition over the past 18 months.

The OBR has also pointed out that falls in immigration would have economic implications. Reductions in net immigration would have a negative impact on UK growth, the fiscal watchdog said in November last year. "If migrants have a similar employment rate and level of productivity to the existing average, a reduction or increase in population growth of 0.1 per cent would translate one-for-one to a reduction or increase in trend growth of 0.1 per cent respectively."

Jonathan Portes, the director of the National Institute of Economic and Social Research, said the OBR would have to revise down its growth and deficit forecasts if the watchdog believed the Government was likely to succeed in cutting immigration. "Less immigration would mean fewer workers paying tax," he said.

http://www.independent.co.uk/news/uk/home-news/wanted-more-immigrants-to-boost-british-economy-6271541.html

Nothing we didn't already know.

There is no way this, or any other government, can or will meaningfully reduce immigration.

The right noises are made to appease the bigots and xenophobes, but the truth is Immigration is vital to the health of the nation and will continue apace.

HAMISH_MCTAVISH

Interestingly, Immigration also contributes to wage growth for the native born population.

Immigration to the UK has made a positive contribution to the average wage increase experienced by non-immigrant workers, according to a new report published by UCL’s Department of Economics and Centre for Research and Analysis of Migration (CReAM). The report was commissioned by the Low Pay Commission as part of its ongoing evaluation of the National Minimum Wage.

http://www.ucl.ac.uk/media/library/immigration

HAMISH_MCTAVISH

And immigrants also make a net fiscal contribution to the UK.

In the long run, it is likely that the net fiscal
contribution of an immigrant will be greater
than that of a non-immigrant. For migrants
of working age who enter the country this is
relatively clear; the UK is receiving the fiscal
contribution of their work, without paying for
the education and training that enables them
to work. Even for young children, by assuming
as we do that each age cohort is treated equally
through the fiscal system, then, in the long run,
migration to the UK is still likely to mean a net
fiscal transfer to the native population.

http://www.official-documents.gov.uk/document/cm72/7237/7237.pdf

Jimmy_31

HAMISH_MCTAVISH wrote: »

Interestingly, Immigration also contributes to wage growth for the native born population.

http://www.ucl.ac.uk/media/library/immigration

The building game is now flooded with immigrants and wages have plummeted.

I wonder what will happen when immigrants take the majority of jobs and houses.

Graham_Devon

Lot of convincing going on here.

Not sure who it's aimed at!

CLAPTON

Yes it's better to accept the benefits of already educated, trained and (work) experienced immigrates and just accept a growing underclass of our UK born young people would can't get jobs due to the competition.

The social costs of increasing youth unemployment clearly haven't been considered or seen as simply be colateral damage.

In any event the benefit claimed is small; in my view well within the calculation error.
Given the impossibilty of predicting our growth rate in a over periods of a few months, it's completely laughable to claim to have measured such small effects and attributed them correctly.
The OBR has so far got every forecast wrong.

Of course we all (as rich people) welcome the observation that

'' immigration has placed downward pressure on the wages of workers in receipt of lower levels of pay. Over the period considered, wages at all points of the wage distribution increased in real terms, but wages in the lowest quarter would have increased quicker and wages further up the distribution would have risen more slowly if it were not for the effect of immigration.''



I assume these expert bodies who write this stuff are tha same lot that advised that we should have joined the Euro because the the benefits it would provide; who failed to forecast the financail meltdown, who faied to predict the current high levels of immigration, who faied to get any economic forecasts right.......

and of course we all welcome a growing population; presumably we will all have a big celebration when it hits 100 million

wotsthat

HAMISH_MCTAVISH wrote: »

The right noises are made to appease the bigots and xenophobes, but the truth is Immigration is vital to the health of the nation and will continue apace.

I don't think you necessarily have to be a bigot or xenophobe to question whether immigration is vital to health of the nation.

We have lots of low skilled eastern European workers in the UK. They can work for the minimum wage and, if they bring a family, can claim a number of benefits. Effectively an employer is paying for low cost labour but the taxpayer has to pay a significant 'wage' to the employee on top of that. If they bring a family the taxpayer also needs to pay for schooling, health care and a multitude of other services. Don't forget that the low skilled immigrant isn't paying for this as they are a net recipient of taxpayer funds from the day they arrive.

On the other hand we have native labour who aren't encouraged to work. We saw an example this week where a poster posted their own experience of facing a 72% marginal tax rate for working over two days a week (two days!).

Working tax credit doesn't work - it encourages native labour NOT to work whilst providing an incentive for migrant labour TO move here.

It's the government's job to ensure that work pays. They've not dealt with the example above because it would mean that as well as providing incentives to work they'd have to provide disincentives too and this would obviously mean a reduction in benefits for worklessness - they are too scared of the media backlash.

So what we have now is expensive low skilled migrant labour (don't forget they don't come here for the good of the UK economy) funded by the taxpayer plus expensive taxpayer subsidies to UK nationals in the form of benefits for whom work at best is optional and worse isn't worth the effort.

Wouldn't it be better to try and get UK nationals motivated to work before importing labour?

grizzly1911

This argument would work if our own native unemployed could be exported somewhere else (not that I am advocating that), I think we should be stemming immigration..

All that is really happening is we are doubling the "available"" workforce and in turn the cost. As UK PLC we are in turn, oeverall, becoming less and less competitive.

kabayiri

grizzly1911 wrote: »

This argument would work if our own native unemployed could be exported somewhere else (not that I am advocating that), I think we should be stemming immigration..

All that is really happening is we are doubling the "available"" workforce and in turn the cost. As UK PLC we are in turn, oeverall, becoming less and less competitive.

This is exactly the issue.

If we have a job which is unfilled; which can not be filled by a native; and which is covered by an immigrant worker then you could agree.

Otherwise the economic benefit the immigrant worker brings has to cover the additional oncosts of the displaced native worker.

The other option is of course using migrant labour from different parts of the UK. If there are job vacancies in the SE, and candidates who can fulfil those roles currently out of work in the NE, it would be in our interest to move the workers to where the work is, or move the work to where the workers are.

Malcolm.

Hamish is a poor mans Jeremy Clarkson. Waving his stick around a hornets nest hoping for a reaction.

At least JC had a book to sell.

HAMISH_MCTAVISH

kabayiri wrote: »

Otherwise the economic benefit the immigrant worker brings has to cover the additional oncosts of the displaced native worker.
.

Once again you fall victim to the fallacy of static systems.

There is no displacement.

A population of 100 million needs pretty much twice as many doctors, lawyers, judges, nurses, street sweepers, fast food employees, taxi drivers, etc as a population of 50 million. And barring unavoidable fluctuations due to the economic boom/bust cycle, long term unemployment in the UK has remained more or less constant in percentage terms for many decades now, despite the increase in population and immigrants. Because over the long term, an increase in population creates a corresponding increase in the number of jobs.

There will always be a percentage of people unemployed, but this is inevitable. Some people are just unemployable. Besides, full employment is not remotely desirable, as amongst other things it's highly inflationary.

Earlier posts in this thread have pointed out that migrants are an economic net benefit to the UK, and that they actually have a positive impact on wages.

So I just don't see why people succumb to the ignorant anti-immigrant rhetoric peddled by the bigots. (And lets be clear, they are bigots, no matter how they like to dress it up)