×

Immigration barriers would hurt UK economy

The initials of the United Kingdom, UK, are seen tagged into a heart-shape logo onto some tents of migrants inside the 'Jungle' camp for migrants and refugees in Calais on June 24, 2016.
Philippe Huguen | AFP | Getty Images
The initials of the United Kingdom, UK, are seen tagged into a heart-shape logo onto some tents of migrants inside the 'Jungle' camp for migrants and refugees in Calais on June 24, 2016.

The historic British referendum to leave the European Union was supported by millions of voters who hope to stop an influx of foreigners to their island nation.

Economists have warned for months that restricting immigration will hurt Britain's relatively robust economy and strain the national budget, forcing the government to raise taxes.

A lot depends on just how soon — and how hard — Britain slams the door shut on migrants.

The latest figures released by the government show that net migration into Britain surged last year.

Some 630,000 people moved into the U.K. in 2015, while 297,000 left the country, for a net migration of 333,000. Of those, 184,000 came from the EU, which poses no restrictions on moving from one member country to another.

While the recent surge in migration into Europe has been fueled by war and political turmoil in the Middle East, the biggest increase in migration into Britain is coming people leaving other, poorer EU countries.

It's not hard to see why. With a jobless rate of 5 percent, the U.K. labor market offers much better opportunities for workers from countries with much higher levels unemployment. That's especially true for younger workers, who are typically more willing and able to relocate.

Britain's higher wages relative to most other European countries have also been a major draw for new arrivals. The average annual salary of nearly 34,000 euros is more than double that of countries like Portugal and Greece, and more than seven times the average pay for a worker in Romania.

In 2010, Prime Minister David Cameron promised to reduce the annual level of net migration to below 100,000, but the influx of people has continued, thanks to the strong labor market. In the last four years, the number of migrants who cited work-related reasons for entering the country has nearly doubled, while those coming to further their education or to join family members has fallen.

Those new workers have helped boost economic growth and produced tax revenues for the government. If new restrictions slow the pace of migration, the average Briton would feel the impact in lower economic growth, slower wage gains and a bigger tax burden, according to some studies.

It remains to be seen just how tightly the government moves to slow the migrants. But the vote to leave the EU will cut wages by 2.2 percent to 7 percent by 2030, according to the National Institute of Economic and Social Research, a think tank.

Leave supporters, on the other hand, argue that it will help boost the economy by eliminating onerous regulations that have dampened growth.

If so, strong growth will continue to provide big incentives for migrants to come to the U.K. to take advantage of job opportunities and good wages.