The EU referendum is the issue of the year. But what are the facts? In the fourth of a series ofbriefings, Alexander Rankine looks at the potential impact on Britain's immigration policy.
What's the current situation?
The latest figures show that net migration into the UK (the numbers arriving, minus the numbers leaving) was 323,000 in the year to last September, more than three times higher than the government's target. EU citizens made up 172,000 of that number, including 45,000 Bulgarians and Romanians. While the UK imposes stringent visa requirements on economic migrants from outside Europe, the EU's freedom of movement principle means that no such controls can be applied to citizens from other EU states entering the UK for work.
Brexiters argue that the current arrangements damage the UK economy by forcing us to favour unskilled European workers over highly skilled workers from countries outside Europe it "discriminates against precisely the sort of people who, in a world of increasing labour mobility, we might actually want to attract", argues UKIP MP Douglas Carswell.
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The major hurdle to a new UK immigration policy post-Brexit would be the terms of Britain's new settlement with Europe. Norway and Switzerland have given hope to many Brexiters by showing that it is possible to be outside the EU but still trade with Europe, but these agreements have strings attached. Most significantly, both must accept EU freedom of movement principles on the same terms as existing member states, and both in fact have more EU immigrants per head living and working within their borders than does the UK.
Of course, the UK is a larger, more important economy and so might be in a position to secure a more favourable deal, but this should be weighed against the fact that the UK has more than a million of its own citizens living in other European countries, meaning that strict new immigration rules could harm British citizens abroad. Other European leaders will also be keen to uphold the freedom of movement principle in a post-Brexit deal, lest it encourage other EU countries to pull out and seek the same terms.
So is a new migration policy impossible?
Proponents of Brexit argue that with sovereignty restored theUK will ultimately be able to make its own choices about what deals it signs up to. The current migration arrangements are certainly unpopular, with opinion polls consistently showing that roughly 75% of the British public favours reducing migration from current levels.
If a tougher line against unskilled EU migrants were to become a "red-line" for the British government in post-Brexit negotiations, then Britain might be willing to negotiate a more limited Free Trade Agreement in return for renewed immigration controls or, as Simon Wilson suggested here in February, simply trade with the EU under World Trade Organisation rules.
What would such a policy look like?
The real problem for globalists like Carswell is that while the public is keen to reduce immigration from Europe, they do not share his enthusiasm for opening the doors to the rest of the world. YouGov polling in 2013 showed that while 70% of people thought immigration rules from Europe are not strict enough, 73% said the same of the rules that apply to immigrants from outside the EU.
MigrationWatch has estimated that new controls on unskilled EU immigrants could cut immigration to the UK by 100,000 a year but while this is a substantial reduction, it would still leave the net migration figures at more than double the government's target, making it highly unlikely that the government would have the political leverage to liberalise visa rules for non-EU migrants. Any new migration policy is likely, if anything, to end up being more restrictive towards all groups.
What about Calais?
That said, in recent months the fate of the thousands of migrants entering Europe has occupied public attention more than the future visa arrangements of Polish plumbers. Cameron has sought to link the issue of the Calais migrant camps to the EU debate by suggesting that Brexit could see the infamous Calais "Jungle" hop the channel to Dover. The Leave campaign has rightly pointed out that the arrangements in place with France are bilateral and have nothing to do with the EU. Britain has also opted out of the new EU Asylum arrangements for refugees, and thus our approach to the migration crisis would be little changed in or out of the EU.
Even if the French were to cancel the arrangement that sees UK border officials check papers at Calais, we wouldn't see camps established in Dover as soon as the migrants reach UK soil they will be able to claim asylum and would then be dispersed to government processing centres all around the Southeast. On this, it's fair to say that Cameron is scaremongering.
Has EU immigration lowered wages?
Former Marks & Spencer boss Stuart Rose, the leader ofthe Britain Stronger in Europe campaign, made somethingof a faux pas last week when he told MPs that one direconsequence of leaving the EU would be that wages wouldrise, as competition for jobs decreased amid a drop inimmigration numbers. He was responding to Labour MPWes Streeting, who asked whether restrictions on EUmigrants "could see an increase in wages for low-skilledworkers in the UK".
Last year, the Bank of England releaseda study that suggested contrary to academic consensus that mass migration did indeed suppress wages,particularly for lower-skilled roles.
Authors Stephen Nickell and Jumana Saleheen found thatfor every 10% rise in the "immigrant-to-native" ratio, wagesin the "semi/unskilled services sector" fell by around 2%.As the authors note, the effect held regardless of whetherthe immigrants came from within or outside the EU.
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
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