Half a million migrants to boost UK economy: Study

A flow of more than half a million migrants into the UK is expected to boost the economy next year by 3.6 billion pounds, a study indicated today.

Over the next three years, migrant workers are forecast to add 9 billion pounds to the economy, adding a 0.2 percentage point to growth in 2009 and 2010.

Out of the 550,000 migrants forecast to settle on British soil next year, 275,000 are expected to be workers who will help maintain GDP growth at 1.8 per cent in 2008.

The influx, largely from eastern Europe, will effectively allow growth to rise by an extra fifth. Without them, the GDP of the UK would grow only 1.5 per cent next year, the study noted.

The latest quarterly United Kingdom Prospects report from the Centre for Economics and Business Research (CEBR), an independent think-tank, found that the predominately unskilled workers would support economic growth against a background of slower global growth exacerbated by the continued credit squeeze.

A net gain in the pool of labour in Britain should also keep a lid on wage inflation, which in turn could give the Bank of England more room for manoeuvre over further interest rate cuts.

During 2008, the CEBR expects 330,000 UK nationals to leave the country. Their exit will place net migration at around 220,000 next year, underpinning both medium- and long-term demand for housing, and economists believe, keeping a check on wage inflation.

Jonathan Said, senior economist at the CEBR, noted: "The rise in foreigners returning to their home countries will be partially offset by an increase in the number of migrants arriving from the latest member states of the European Union."

The continuous influx of relatively young workers will limit the effects of an ageing population and help the British economy to maintain long-term growth above the 2 per cent threshold."