UK raises migration projection in potential boost for economy

The UK is set to take in a quarter of a million more foreign nationals over the next four years than previously thought, providing a potential boost for the economy.

Officials now expect net migration to be higher between now and 2026, with the figure settling at 245,000 a year thereafter rather than the 205,000 estimated a year ago, Office for National Statistics projections published on Thursday (Jan 26) show.

The new figures will be incorporated by the Office for Budget Responsibility as it prepares new economic forecasts for Chancellor of the Exchequer Jeremy Hunt’s budget on Mar 15.

By boosting the potential size of the economy, the upward revision to net migration will help to offset an expected downgrade to the outlook for productivity. 

The reassessment comes after over half a million more people arrived long term to the UK than departed in the year to June last year, a far greater number than forecast. 

However, the increase was entirely due to migration from countries outside the European Union (EU), including students. On balance, more EU citizens left the UK than arrived, the result of tighter post-Brexit immigration rules. 

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Higher net migration may therefore do little to fill labour shortages in industries such as hospitality and construction that relied heavily on workers from the EU. Many have been forced to raise wages sharply to recruit staff, fanning inflation in the wider economy. BLOOMBERG