In the News Teaching Activity – immigration is starting to fall, but is this too costly for the economy? (June 2024)

In this article, Jonathan Portes at the UK in a Changing Europe considers the potential economic costs of lower immigration.

With both main political parties promising greater control of immigration and the Reform party leader arguing for zero net migration in future, it is worth considering what this might mean for the economy. Portes argues that lower immigration is likely to slow growth, cause labour shortages in some sectors and reduce the speed of public sector debt reduction. Higher taxes in future are even more likely to be needed. What little economic growth the UK has had in recent years has come largely from an increase in the size of the labour force rather than from labour productivity growth. Remove this flow and many sectors, such as health and social care, already striving to recruit, could struggle to deliver the services they provide. It is unclear how these job vacancies will be filled given the UK has been pretty close to full employment, though unemployment is starting to rise now. This all has implications for the UK economy, which has an aging population and a fertility rate of 1.57 (down from 2.89 in 1962). Economic migrants are often relatively young, are more skilled on average and typically contribute more to public finances than they cost. Migration is a complex issue – it can put pressures on housing and public services – a more nuanced policy approach rather than headline-grabbing pledges to control immigration is what is needed.

Immigration is falling but the economic cost may be high - UK in a changing Europe (ukandeu.ac.uk)

1 What factors have contributed to the recent fall in immigration in the UK?

2 Using your own knowledge, examine whether the UK economy is close to full employment.

3 Using the evidence from the article, discuss the likely costs to the UK economy of lower immigration.