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We must make the case for immigration
Britain needs high levels of immigration if it is to thrive, says Matthew Lynn – regardless of whether or not we decide to join the single market.
The UK is about to start the hard work of working out what we actually mean by Brexit. Of course, that will depend on what the rest of Europe is willing to offer. But it also means figuring out what we need. There are two big issues. One is access to the single market, the other immigration. The two issues are usually linked, mainly because the EU insists that they should be. Big business, which has a lot at stake in this debate, regularly insists that we need access to the single market, and that we will have to accept freedom of movement for labour because that is one of the rules of the club.
This argument is the wrong way around. The rules of the single market we can't change anyway and there is no reason for the rest of Europe to be willing to cut us a special deal. But immigration is a good thing regardless of the single market.
The single market is perhaps the most over-sold trade agreement of all time. It is not the same as virtually tariff-free access to a market, which is guaranteed under World Trade Organisation rules, apart from a few minor levies. It is a complex set of rules on product standards and accesses.
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It was only launched in 1992, and despite the grand predictions at the time, there is very little evidence that it has added significantly to growth. If the single market was so great, you'd think there would be a bit more evidence of its impact by now. We will find out if and when we come out but it is a fair bet that no one will notice.
Immigration is different. Unlike the single market, we know for sure that the numbers of foreign workers coming into the UK has had a huge impact on our economy. More than 250,000 EU citizens have been arriving in the UK ever year to work, along with a similar number of people from the rest of the world.
The numbers from the EU have risen by about 100,000 a year since 2010, mainly because of a flood of young people from Italy and Spain as work dries up in those countries. The reason? The UK is very good at generating lots and lots of jobs, even if many of them are not particularly well paid. Firms need them if they didn't, they wouldn't be coming here.
Losing that would be a huge wrench. An extra half a million people a year has a massive impact on the labour market. True, some firms could automate a bit more. There could be more self-scanners in supermarket and more pay-at-the-pump petrol stations. But all that is going to be marginal at best. Across a whole range of industries, from construction, to leisure to hospitality to retailing,the impact would be horrendous.
High levels of immigration also bring the overall age of the population down and add dynamism to the economy because migrants are usually young and ambitious. Last year more Poles started new businesses than any other immigrant group. They are good for the economy in themselves not something we have to accept reluctantly as the price of staying in the single market.
Making that argument, however, will be tricky. Most ordinary people couldn't care less what big businesses say about immigration. If they did, they'd have voted Remain. Instead, business needs to make a far more direct case.
It should be saying that we need high levels of immigration, and while it is fine to have more control over who comes in, that should be about requiring higher levels of skills, not about reducing the overall numbers. It needs to start explaining the benefits of immigration, arguing we need more workers regardless of whether we are in the EU or the single market or not. If it doesn't, it will lose access to those people and that really will be a problem.
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Matthew Lynn is a columnist for Bloomberg and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
