Cut in immigration risks damaging economy

New research revealed that a fall in immigration will hit the economy, with lower productivity and lower growth. The research was conducted by the National Institute of Economic and Social Research (NIESR) who focused on two scenarios: a ‘middle range’ Brexit and a ‘hard’ Brexit.

‘Middle range’ Brexit

In a ‘middle range’ Brexit where immigration falls by 91,000 a year, GDP per head was likely to fall by 3.4% by 2030 than it would have been otherwise. On a more positive note (but only modestly positive), it also find that wages for low-skilled or low-paid jobs would rise by up to 0.51% a year in the same time period.

‘Hard’ Brexit

Things look even worse in a ‘hard’ Brexit scenario where immigration falls by 150,000 a year. The research finds that this level of immigration cut would lead to cut GDP growth per head by 5.4% by 2030. Wages for those same low-skilled or low-paid jobs would be slightly higher rising by 0.82% a year.

Workers unlikely to be better off

The report warns that the modest positive impact on low-skilled jobs may not mean that workers would be better off. This would depend on wider economic impacts of Brexit. And as other reports including the forecasts by the Office for Budget Responsibility (OBR), is not looking good. As well as predicting a £59bn black hole as a direct result of Brexit, it also found that £16bn of that would be due to lower immigration. The weakened pound has already led to rising food prices.

It’s hard to see how the below 1% increase in wages for low-skilled jobs would be able to counter higher prices overall.

Openness to migration and trade needs to be a priority

Research fellow, Jonathan Portes, who conducted the research along with Giuseppe Forte wrote a piece in the Independent with their analysis of the findings. He concludes that for Brexit to be a success, Britain needs to be open to migration as much as trade.

Restricting trade, capital flows and immigration – reducing the openness of the UK economy – all have negative economic impacts.

If we want to make an (economic) success of Brexit, that will mean making openness – to migration as much as trade –a priority in our policies with respect both to the EU and the rest of the world.

Jonathan Portes for the Independent

You can find out more on NIESR’s research here: The Economic Impact of Brexit-induced Reductions in Migration.

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