Government advisory body says UK needs more skilled immigration

The UK's Office for Budgetary Responsibility (OBR) has advised the government that the country requires high levels of immigration to help grow the economy. It says that young migrants who come to the UK as skilled workers will have the greatest beneficial effect on the national accounts.

The OBR published its Fiscal Sustainability Report 2013, published on 17th July 2013. This report looks at the economic outlook for the UK in the medium to long term. It looks at all the factors that will affect the economy, from natural resource production to employment rates to immigration. The purpose of the exercise is to see whether the UK's fiscal position is sustainable in the long term.

The report finds that immigration, or a lack of immigration, will greatly affect the UK's economic performance and debt levels over the next fifty years.

UK has ageing population

The UK underwent a 'baby boom' between about 1945 and 1970. There is now an ageing population. Without immigration, there will be a shortage of labour to fill the available positions. The country is also experiencing a decline in revenues from the exploitation of North Sea oil and gas.

The country was also very badly hit by the economic crisis of 2007. The UK's economy is very dependent upon the financial services sector and the government was forced to spend many billions bailing out UK banks. In addition, the government has been spending more than it takes in in tax receipts for many years. As a result, the national debt currently stands at 90% of GDP.

The government is attempting to reduce this figure but the OBR warns that, if net immigration fell to zero in 2016, then by 2066, public debt would have risen to 174% of GDP. If immigration remained at the 2010 level of 260,000 then the public debt would have fallen to 75% of GDP.

Younger migrants better for the economy

The effect would be more favourable for the country if more of these migrants were young, working age migrants who would be economically active and would contribute very much more to the economy than they would take out, the OBR says.

The report says that 'the fiscal impact of immigration tends to be small in most countries' but says that there is 'clear evidence that, since migrants tend to be more concentrated in the working-age group, relatively to the rest of the population, immigration has a positive effect on the public sector's debt dynamics'.

The UK government is committed to a policy of reducing net immigration to below 100,000 annually by 2015. This puts it in disagreement with its own budgetary advisor.

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