Migrants will add to the labour force and boost the supply side of the economy, Bank of England Chief Economist said
Higher-than-expected migration in the United Kingdom will have a positive economic impact and led the Bank of England to raise the country’s growth forecasts by 0.2 percentage points, Bloomberg News reported, citing the bank’s chief economist.
Huw Pill told a parliamentary committee in May that upward revisions to the Office for National Statistics’ population projections – driven by net immigration – “led to an increase in the level of GDP of about two tenths of a percentage point” by the end of 2025 relative to its previous forecast, according to the Bloomberg News report.
Net migration into the U.K. is now expected to stabilise at about 245,000 annually by the year to June 2027, up from the previously estimated 205,000, ONS data shows. In 2022, long-term immigration was estimated at around 1.2 million while emigration was 557,000, leading net migration to jump 24 percent to a record 606,000.
The impact of migration on the economy has grown after more than half a million people dropped out of the U.K. workforce since the pandemic, leading to an increase in wages as companies competed for labour. That has contributed to U.K. inflation, which was at 6.3 percent in September, more than three times the Bank of England’s target.
Rising migration is helping the economy for now. Migrants are adding to the supply side of the economy and helping boost growth, Pill said, according to the Bloomberg News report. They would also help boost demand by consuming more.
Migrants are “contributing to the productive capacity of the economy but also demand in the economy,” Pill said. “That washes out in terms of pressure on resources and therefore on inflation, so it really is more of a growth story.” ONS forecasts shows the inflow of foreigners declining by 5.1 percent in the year to June 2024 to 295,000. It will drop a further 6.1 percent in the following year and by 5.8 percent in the year to June 2026 before stabilising at around 245,000 annually thereafter.
The U.K. government is under pressure to reduce the number of foreign nationals coming to settle in the country, which was one of the main election planks of the ruling Conservative Party. Earlier this month, the government increased fees for a range of immigration and nationality services by 15 to 20 percent. It recently also announced stiff increases in fines for employers hiring illegal immigrants as well as for landlords letting their property to illegal immigrants.
If you are keen on immigrating to the U.K., Visa Kings Global can present you with several options. You can get in touch with us for a consultation.