Recent assessments by the Office for Budget Responsibility (OBR) have sparked a nuanced discussion on the impact of migration on the UK's economy and public finances. The OBR's analysis suggests that higher migration levels can reduce national debt and deficit, even with increased public spending to accommodate the growing population, as indicated by the statement *even if public spending is increased to match*. This challenges the long-standing assumption that migration solely offers a cost-free boost to the economy, by highlighting the need to consider impacts on public services, as noted on page 127 of the OBR report. Additionally, the OBR's findings indicate that while a higher migration rate of 200,000 people per year could increase the overall GDP by 1%, it might also reduce GDP per capita by approximately 0.4%, as shown by yellow triangles in the report, suggesting a potential dilution of the capital stock and a flattening of GDP per capita growth. This has led to criticisms of the government's immigration policy, with commentators like Iain Martin of The Times arguing that the assumption of needing continuous immigration to drive economic growth is flawed. Furthermore, the OBR has warned that high migration levels are putting pressure on public spending.
High migration squeezing public spending, OBR warns https://t.co/yOzhNYReQt
"We’re shipping in more people & GDP per capita is flatlining. This blows a hole in Whitehall’s assumption we need ever more immigration to drive growth" (Iain Martin, The Times). Indeed 👇 https://t.co/enNED9cWuS
OBR p.31 v interesting on migration & living standards. Assuming higher migration dilutes the capital stock (realistic) then 200k extra migration a year increases GDP 1%, but CUTS *per head* GDP about 0.4% (shown by yellow triangles). > So much for 'making us better off'. (1/3) https://t.co/VkAwqhtg0G
OBR estimates of the impact of migration on the public finances: higher migration reduces debt and deficit, *even if public spending is increased to match*. https://t.co/Fao6dirQ4j
This is REALLY important long-term for the migration debate. @OBR_UK is no longer assuming (as it long has) that migration is a cost-free boost to the economy - actually trying to model impacts on public services. (p.127) https://t.co/eBkFP8w8w6