Brexit will let Britain halve net migration: Major report delivers devastating verdict on post-referendum scaremongering
- Net migration set to fall from 330,000 to 165,000, say Cambridge researchers
- Centre for Business Research says negative impact on growth will only be tiny
Brexit will allow the UK to halve net migration, a major study indicates today.
The cut will provide a long-term boost to wages and help ease the national housing crisis, say Cambridge University researchers.
Any negative impact on growth will only be tiny and would probably have happened even without a vote to leave, according to their research.
Nigel Farage standing in front of UKIP's controversial poster during the Brexit campaign. Today's report says net migration will be halved by leaving the EU
The academics deliver a devastating verdict on the Treasury’s pre-referendum scare-mongering, accusing officials of ‘flawed and partisan’ forecasts about the country’s prospects outside the EU.
Instead, they say leaving the Brussels club will allow net migration – the difference between the number of foreign nationals arriving in the UK and those leaving – to be cut to 165,000. The total currently stands at a record 330,000.
The report came as a raft of economic good news emerged yesterday including record car sales, a fresh high for the FTSE and a report showing that business confidence is returning.
The Cambridge study, from its Centre for Business Research, said slashing net migration would give British workers more wage bargaining power while reducing the pressure on housing supply.
It said: ‘Controls on immigration from the EU are assumed to be imposed in mid-2019, leading to net migration falling to around 165,000 from 2020.’
On wages, the report states: ‘Our equations for earnings suggest that earnings will rise by more than 2 per cent as employment rates reach a peak in 2017 and especially as migration reduces from 2019.
‘The UK labour market has become very dependent on foreign-born labour with the increase in foreign-born workers being equivalent to over 80 per cent of additional employment since 2004.
‘Immigration restrictions will provide the biggest shock to wage bargaining for over a decade.’
The Treasury’s doom-laden report predicted a fall in real wages, which factors in rising inflation.
By contrast, the CEBR predicts they will keep rising in line with inflation until around 2025. From then on, there will be steady real-terms rises.
On housing, it says – without Brexit – homes would have become much harder to afford as prices far outstripped wage growth.
Before Christmas protesters urged Theresa May to press ahead with Brexit and not delay it
The report states: ‘With lower net migration after 2019 this pressure is expected to recede.’
The report said that only one of the Treasury’s many gloomy predictions – a sharp fall in sterling – had been realised.
The economists said even this had a positive impact because it would reduce the UK’s balance of payments deficit to a ‘manageable level’.
Crucially, the fall in the pound has also effectively wiped out the impact of any tariffs which may be imposed on UK exports by the EU once Brexit is complete. For 2017, the economists predict growth of GDP will be between one and 1.5 per cent and ‘could even be 2 per cent’.
Graham Gudgin, one of the authors of the report, said the Treasury’s work had been ‘very flawed and very partisan’.
‘The Treasury said there would be four quarters of recession, we have had six months since the Brexit vote, we should have been in recession by now, but we are not,’ he said.
Overall, the study says of the economy: ‘The economic outlook is grey rather than black, but this would, in our view, have been the case with or without Brexit.’
Former Tory Cabinet minister John Redwood said: ‘The Treasury was far too pessimistic about Brexit - and constantly far too optimistic about the alleged benefits of the EU single market.
‘Long term, I don’t think Brexit is going to have any negative effect.’
Figures released yesterday revealed car sales hit a record high last year as families brushed off doom-laden warnings about the threat posed by Brexit.
Some 2.69million new cars were sold in the UK in 2016 – up from 2.63million the previous year, according to the Society of Motor Manufacturers and Traders.
In a further boost to the economy, the FTSE hit a new record high for the fifth trading day in a row – a first since January 1998.
A report by the British Chambers of Commerce also shows business confidence is returning as the fall in the pound helps exports.
BCC director general Adam Marshall said: ‘Our findings suggest that business communities across the UK remain resilient, and many firms are expecting continued growth in the months ahead.’
Separately, analysts IHS Markit said its index of activity in the construction sector – where scores above 50 show growth – rose from 52.8 in November to 54.2 in December.
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