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Are UK Immigration Policies Damaging the Economy?

By: Louise Smith, barrister - Updated: 4 May 2014 | comments*Discuss
 
Immigration Economy Net Migration Cap

The coalition government is committed to reducing net migration - the difference between the number of immigrants and emigrants - to the UK. It has stated that it intends to cut net migration from “the hundreds of thousands to the tens of thousands” by the end of the current parliament.

The UK’s Government’s Policies on Immigration

One of the first major changes aimed at reducing immigration was implemented in April 2011, when the government's new annual immigration cap came into force. Under the new restrictions, employers may bring a maximum of 20,700 people, from outside of the EU, to work in skilled positions in the UK. In addition, a further 1,000 visas are made available annually to people of 'exceptional talent'.

How to Strengthen the UK Economy... By Reducing Immigration

The coalition has a stated aim of diversifying the UK economy away from financial services and towards science and high technology sectors. The government has also argued that talent is mobile, and that the best people will move to the location that offers them the most. However, this is usually argued in relation to discussions on higher tax rates and the financial sector.

The government maintains that it can help growth by reducing immigration. To this end a range of new measures has been designed by the Home Office to reduce annual net migration to below 100,000 by 2015. Since it is not possible for the UK to restrict EU migrants, the government focuses its efforts on reducing the number of non-EU migrants, including those from Australia, New Zealand, Canada and South Africa. Workers from EU countries are free to take any job in the UK and make up a third of all foreign-born workers in the country.

How to Damage the Economy... By Reducing Immigration

Business leaders are now questioning whether a cap on skilled non-EU workers is an appropriate response to public anxiety at the number of low-skilled EU workers in the UK - especially when highly skilled non-EU workers make up only a fraction of the total. Experts also believe that it is the workers of “exceptional talent”, fighting for the 1000 visas mentioned above, who could make the biggest contribution to science and the arts in the UK. Some of the very sectors that the government has said that it wants to encourage.

The Home Office intends to cut the number of non-EU economic migrants by introducing a cap on those earning less than a threshold salary level, set between £31,000 and £49,000 a year. Migrants earning below the stipulated salary level after five years will face statutory expulsion. The independent commission that advises ministers on immigration calculates that this policy would reduce the number of non-EU migrants and their families by 65% within five years and that the cost to growth in the UK would be equivalent to 0.29% of gross domestic product (GDP).

A group of prominent economists has urged George Osborne to fulfil his pro-growth agenda by modifying immigration curbs that rely on salary thresholds. In an open letter to the Financial Times, published in November 2011, they wrote that the policy would be “deeply damaging” to the competitiveness and growth of the UK. The letter said that the policy appeared almost to have been designed to deter the immigrants most wanted by the UK and to expel those the country would most like to stay. (Quasi-academic jobs in scientific research tend to be low paid, especially in comparison to jobs in the financial sector.) The letter pointed out that it was impossible to spot the future entrepreneurs and Nobel prize-winners after only a few years and that initial salary levels were no gauge of potential.

A Different Approach to the Economy and Immigration

The Westminster government’s immigration policies contrast with those of the, Scottish National party-led, government in Edinburgh. It wants to maintain Scotland’s recent population growth. Historically, emigration from Scotland exceeded immigration by a greater degree than in the rest of the UK. However, since the 2004 entry to the EU of several central and eastern European countries, Scotland has seen a greater number of immigrants than the rest of the UK. The Scottish government has declared an intention to both encourage Scots to remain within the country and to attract talented workers from the rest of the world. This is seen as vital to economic recovery and growth.

News that net migration into the UK has reached record levels may intensify pressure on the government to clamp down on foreigners entering Britain. Recent figures suggest that fewer Brits are emigrating; therefore, even harsher measures may be required to keep net migration within the UK government’s intended limits. Unless, that is, they decide that deterring skilled workers is not the best way of stimulating economic growth.

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