News in 2006
23rd August 2006
How immigrants sustain Britain's economic growth
The positive impact of the influx of migrant workers from eastern Europe on the British economy has enabled Gordon Brown to hit his growth targets, according to a new study.
It suggests that the Chancellor may have missed his key economic goals without the boost from the estimated 600,000 migrants from the eight former Soviet bloc nations who have come to Britain since their home countries joined the European Union two years ago. They now account for about 2 per cent of the UK's 30 million-strong workforce, contributing an estimated £2.5bn a year to the economy.
Business leaders also called for Britain to maintain its open-door policy for key foreign workers. Business for New Europe, which counts the former Tory minister Leon Brittan as well as chief executives and chairmen from blue-chip companies including Reuters, Carphone Warehouse, Sainsbury and the London Stock Exchange on its advisory panel, said further migration was a " cause for celebration, not cowardice".
Meanwhile, the construction industry indicated that there could be insufficient capacity to complete the Government's building programmes without new migrant labour. There are plans for 30 major hospital projects, including the £1bn scheme at Barts in London. Only last week the Government announced a further six projects worth £1.5bn, as well as plans for 50 new community hospitals. Labour is also committed to a programme of school building and refurbishment, as well as the scheme to regenerate the Thames Gateway, where 40,000 new homes will be built on former brownfield sites.
Maurice Fitzpatrick, senior tax manager at the accountancy firm Grant Thornton UK LLP, concluded that foreign workers were vital for Mr Brown to achieve his targets. "It seems likely that immigration has contributed 0.5 per cent to 1per cent to UK economic growth in each of the years 2005 and 2006. In terms of Brown's 2005 economic growth forecast, this was definitely needed in order for it to be achieved, and for the 2006 growth forecast it played a significant (perhaps crucial) part in its achievement."
Although the number of people claiming unemployment benefit has also risen slightly over the past two years, Mr Fitzpatrick said this might have happened anyway, since the economy had been growing at below its trend level, estimated by the Treasury at 2.75 per cent a year, even after the " immigration effect".
He added that migration had exerted a downward push on wage rates, which may have aided Britain's international competitiveness and helped to keep interest rates low.
Roland Rudd, chairman of Business for New Europe, said the rewards could be felt across the economy. "As well as Polish plumbers and property investors, the UK economy benefits from Hungarians in hospitality, Estonian engineers, Czech caterers and Slovakian scientists. This is because of our open labour markets following the EU enlargement of 2004. We have reaped the reward of this approach. We should abandon it at our peril."
Meanwhile, the National Farmers' Union said that at this time of year its members were dependent on as many as 70,000 migrant workers to bring in the harvest. "It is a plain fact that without these people a lot of businesses would not be able to operate and a lot of British food would not be on the shelf," said Philip Hudson, the NFU's chief horticulture adviser. "The myth to put to bed is that UK farmers don't look for UK labour they do."
According to Gerry Lean, industrial relations director of the Construction Confederation, 10 per cent of employees on UK building sites are thought to be from overseas up to 100,000 workers, many of them with vital craft skills. "If we didn't have these people we would suffer very badly," he said.The study will be seized on by supporters of a liberal policy on migration as evidence that the Government should extend its "open door" policy to workers from Romania and Bulgaria, which are due to join the European Union in January.
Mr Fitzpatrick acknowledged that some of the 427,000 registered workers, which does not inlude self-employed workers such as builders, had come to Britain from the former Soviet bloc countries and had taken low-paid jobs, but said that a relatively high proportion were based in London and the South-east, areas which enjoy the highest pay in the country.
The findings may go some way to allaying the fears of Labour MPs who are warning that Britain is suffering from "migration fatigue" and that British workers are being squeezed out by eastern Europeans.
Source: The Independent
