Economic Effects of Immigration in the UK

Within the past ten years, immigration has tripled in the UK. The rising trend of immigration has led to a strongly negative perception towards foreigners within the British population. Economists have a more modest opinion on immigration; the economic impact of immigration seems crucial, but it would seem that it in fact only has a small effect on the domestic labor market. Furthermore, the Home Office has indirectly conceded that they have lost the general compendium over the number of incoming immigrants, creating objectives to manage immigration to the benefit of the UK. Firstly, an assessment of the immigration statistics will be made, giving an overview of the accrued immigrants as of
As a result output and investments are encouraged to rise. On the bottom line, the mentioned circumstances are likely to allow the unemployment rate to remain unchanged. Moreover, households will benefit from fewer effects of the price of goods and services and as the wages won’t increase by much,³ the risk of outsourcing is minimized. As immigrant workers both produce and consume goods and services, the implications for inflation and interest rates are rather positive. In general, extra people in the labour force encourage an increased number of investments. However, as many of the immigrants show a tendency to send back a fraction of their income to their home countries in order to support their families, 4 the economic reaction chain is modified. The described situation would connote immigrant workers boosting supply more than demand, and therefore inflationary pressure would be reduced. On the basis of these results, the Monetary Policy Committee (MPC) would be able to keep interest rates lower than it would otherwise be able to. Increased congestion on roads and public transport is generally agreed to be a negative aspect of rising immigration.1 PWC assumes that the increased demand for housing will lead to constricted supply and therefore push the prices up for buying property as well as renting. The effect is consolidated since immigrants tend to take residence in areas with a high