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U.K. Immigration Has Positive Fiscal Impact

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  2. U.K. Immigration Has Positive Fiscal Impact

The average European migrant will contribute £78,000 more than they take out in public services and benefits over their lifespan in the U.K., while the average non-European migrant will provide £28,000, an Oxford Economics study found.

One of the key concerns around immigration in the United Kingdom is the strain that it places on its public services and finances. So, what impact does immigration really have on the U.K. economy and its public finances? There have been several studies on the theme, but a key recent research was carried out by Oxford Economics in 2018 ahead of Brexit.

The government asked its Migration Advisory Committee to report on the economic and social impact of migrants from the European Union in the U.K. The MAC commissioned Oxford Economics to estimate the fiscal consequences of immigration using most recent data.

Oxford Economic’s study concluded that European migrants living in the U.K. contribute £2,300 more to the public purse each year than the average adult.

In comparison, each U.K. born adult contributed £70 less than the average, and each non-European migrant contributed over £800 less than the average. So, the economic impact of immigration varies a great deal depending on where the migrants come from.

The average European migrant arriving in the U.K. in 2016 will contribute £78,000 more than they take out in public services and benefits over their lifespan in the U.K. assuming a balanced national budget, the Oxford Economics study found. The average non-European migrant will make a positive net contribution of £28,000 while living here, while the average U.K. citizen’s net lifetime contribution in this scenario is zero.

Considered together, the migrants who arrived in 2016 will make a positive contribution of £26.9 billion to the U.K.’s public finances over the entirety of their stay. The value of this to the U.K.’s public finances is equivalent to putting approximately 5p on income tax rates across all rate bands that year.

The U.K.’s foreign-born population, or migrants, was about 14 percent of the total by the beginning of the 2020s, according to research by The Migration Observatory at the University of Oxford Centre on Migration, Policy and Society. The U.K. had an estimated population of 68.1 million at the end of June 2023, according to the Office of National Statistics, so about 9.5 million of these would be foreign-born.

Net migration into the U.K. is expected to stabilise at about 245,000 annually by the year to June 2027, ONS forecasts. 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. A total of 925,000 non-EU nationals, 151,000 EU nationals and 88,000 British arrived in the U.K. in 2022.

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