Contrary to the popular view that immigration from less-developed countries imposes a financial burden on taxpayers in the UK, a recent report by University College London’s Centre for Research and Analysis of Migration indicates that immigrants, especially those from East European nations described as new Europe, actually contribute more to the UK economy in the form of taxes and other contributions.
Comparing taxes paid by immigrants from ten nations that joined the European Union in 2004, collectively described as new Europe, with the benefits and public services utilized, the report indicated that the immigrants made a net contribution of around £5 billion to the UK economy. The authors of the report proceed to describe immigration as, contrary to popular opinion, a boon to public finances
The authors have adopted a conservative approach in determining the net benefit that immigrants contribute to the Treasury. Their calculations consider the immigrants’ proportionate share in variable as well as fixed public services costs. Since defence and armed forces cost don’t increase due to immigration, the actual net benefit to the UK economy may be significantly higher.
Excluding fixed costs, the net gain from immigration to the UK economy may well exceed £10.5 billion. On the other hand, the indigenous residents of the UK were actually a drain on the public exchequer. The indigenous population consumed excess benefits and public services to the tune of £617 billion. If immigrants were to be excluded from the share of fixed costs, then the total fiscal impact would rise to £679 billion. The latter approach is more rational considering that UK’s expenditure on defence and Armed forces would continue irrespective of whether immigration was high or low.
It seems immigration, irrespective of the home country of the immigrants, is good for the UK economy. Immigrants from the EU, other than new Europe, contribute a net gain of £15 billion to the UK economy. If fixed costs were excluded, the net gain rises to £18 billion. Immigration from the rest of the world too is a profitable venture with net gain around £5 billion including fixed costs and £20.5 billion excluding these costs.
The report underlines that the UK’s fiscal condition would be significantly poorer in absence of immigration and that taxes and public borrowing would have been far higher. Considering the UK’s continued struggle with high fiscal deficit, the overall profitability of attracting immigrants may seem like a very relevant point.
In a bid to minimize distortions, the authors have considered a wide range of in-work and out-of-work benefits including tax credits and child-related benefits. The report categories Europe into immigration from old and new Europe to determine the net benefit of immigration from the accession countries.
Other points highlighted include the young age of migrants seeking entry into the UK. The low age is a plus considering the contribution of immigrants to the UK economy will continue to rise as the immigrants become more skilled. The country may also avoid the costs of caring for retired migrants as they may prefer to return to their country in their old age.
The authors have also indicated that immigrants tend to be better educated than native residents of the country. However, there are some costs that the report does not consider. Immigration generally results in a decrease in the wages earned by the native population. This, in turn, may contribute to a rise in the in-work benefits borne by the State.
On the whole, the report indicates that the argument that immigrants end up being a burden on the UK economy is not backed by the numbers.
Source: www.bbc.comGeneral Information: Contact us to receive more information about this article.
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