Has mass immigration made Britain richer or poorer?

Telegraph

27-05-2025

No issue has dominated British politics more in living memory than immigration.
In a seismic about-turn this month, Sir Keir Starmer warned Britain risked becoming an 'island of strangers'.
Experts have long argued the economic benefits of immigration – which is currently running at more than one million new arrivals a year – are substantial.
Net positive migration, where more people arrive than leave, is generally assumed to increase a country's gross domestic product (GDP). What is less clear is whether this actually makes households any richer.
Last year, following record levels of immigration to the UK, the Government tasked a group of academics with finding an answer to this question.
They concluded increased migration was associated with a rise in productivity, the key factor that determines whether individual wealth goes up or down.
Jonathan Portes, professor of economics at King's College London, said: 'In the short term, we can be reasonably sure that migration, including the current mix [Britain is receiving], is modestly positive for GDP per capita.'
This is because 'migrants overall seem to have about the same wage levels as Britons and the ones who are coming seem to be progressing well in the labour market,' he said.
The problem is average earnings for UK workers have not – in real terms, taken out of inflation – substantially increased since 2008. If Labour succeeds in obtaining higher levels of economic growth, it is expected wages would finally start to rise again.
However, argued Mr Portes, migration does not hold the key to achieving this.
He said: 'You can't solve Britain's growth problem through migration alone. It's reasonable to say it's not the main thing that determines whether we have higher or low growth.'
He added: 'The reasons for low growth over the Past 15 years are related to Brexit, austerity and the incompetence of the previous government, and migration is not going to solve any of those. It's just one of the things that makes a positive contribution.'
Mr Portes was an author of the study by the Migration Advisory Committee, an independent body that provides advice to the Government on immigration, which assessed the economic benefit of immigration between 2002 and 2018.
It found immigration had a 'positive and significant impact', and identified a 1 percentage point increase in the share of migrants coming to Britain was associated with a 0.84 point rise in productivity.
Despite the arrival of millions of migrants in Britain in recent decades, earnings have remained more or less flat since the global financial crisis.
Any added productivity immigration may have brought is put into stark context when you look at GDP per capita, which reflects economic output divided by the population.
'Low-skilled migration won't make us richer'
There are concerns over what kind of migration is in the best interest of British taxpayers and whether it is a viable long-term solution for fixing the wider problems suppressing growth.
Immigration is now falling after a period of record growth. Long-term net migration is down by almost half, the Office for National Statistics (ONS) said last week.
The number of people immigrating to Britain, minus those who are leaving the country, was provisionally projected to be 431,000 in the year ending December 2024, compared with 860,000 in the year ending December 2023.
A previous forecast by the Office for Budget Responsibility in March suggested Labour is forecast to preside over a long-term surge in migrants as more choose to remain in the UK.
It came after the ONS, which has faced criticism over its data, made revisions that added an extra 15,000 migrants to estimates that net migration will settle at 340,000 a year by the end of the decade.
Nevertheless, immigration is widely expected to fall in the coming years, but fewer people than previously thought will leave the country in that time.
Net migration added a record 1.6 million people to the population in the two years to June 2024, leading to the issue once again becoming one of the biggest concerns for voters.
It set the stage for Sir Keir to promise this month to reduce immigration in a speech that came after Reform UK made significant gains on Labour in the local elections.
The Prime Minister blamed the previous Conservative government for allowing immigration to reach higher levels in an 'experiment in open borders'.
Kevin Foster, a former Conservative immigration minister under Boris Johnson, said immigration of skilled professionals was beneficial to the economy, while the movement of low-skilled workers did little to improve earnings.
'We have to avoid lumping everyone together,' he said.
He claimed the 'peak periods' of immigration under the Conservatives were when Rishi Sunak was prime minister, rather than during Boris Johnson's premiership.
Net immigration indeed peaked under Mr Sunak, at just over 900,000 in the year to June 2023 before beginning to decline, according to The Migration Observatory, a think tank.
However, it rose most rapidly during Mr Johnson's time in Number 10. Mr Foster explained this was because of an influx of refugees from Ukraine and British nationals from Hong Kong.
Asked whether he thought immigration could make households wealthier, he said: 'A lot of it depends on what route [migrants come to Britain].'
Since a new visa route was opened in 2021 following Beijing's crackdown on freedoms in Hong Kong, around 150,00 people have come to Britain from the former colony, according to figures cited by the House of Commons Library in October.
As of last summer, approximately 210,000 Ukrainian refugees had arrived in the UK under a scheme set up in the wake of Russia's invasion of the country in 2022.
Mr Foster said: 'Let's start with Hong Kong. A lot of people who have taken advantage of [the resettlement scheme] are fairly highly qualified and work in industries like finance and have a good net value added for coming into the UK.'
He said this contrasted with the prospects of some of the people coming to Britain to claim asylum. 'There have been concerns about the ability to move into employment. After arrival, those who have come [can] end up in lower-paid, more general-skilled jobs that do little to contribute to productivity.
He added: 'A group of Hong Kong financial sector workers isn't going to have the same impact on our economy as someone coming as a small boat migrant. If you have too many who are arriving through more general-skilled roles, you do have an issue there with the potential cost to the taxpayer.'
'Blame austerity, not immigrants, for stunted wages'
Stephen Millard, director of think tank The National Institute of Economic and Social Research, believes GDP per capita is likely to be higher now than it would have been without immigration.
'On GDP, if we are using this as a measure, it's very clear immigration raises it, if you have more people there's more output and GDP is higher. What's more important though is GDP per head.
'The immigration we have seen over the past couple of decades has raised productivity relative to what it would have been otherwise. There's always issues about how extra income is spread around the population and the distribution [but] there is certainly more output per head resulting from the immigration we have seen.'
He refutes the idea that immigration has made Britain poorer or suppressed growth. 'You can't blame immigration for the low productivity growth – it's got to be something else.'
'The two major contributors are the lack of investment in the UK, that's both public and private, compared with our peers. Business investment is lower than any other major Western economy, and that's got to have an effect on productivity,' he said.
'In 2010, we saw a period of incredibly low public investment during the austerity period. Public investment in things like infrastructure, skills, training and healthcare will lead to higher productivity. If you go through a period with low investment in those areas, it will hit productivity.'