Immigration restrictions will do serious long-term damage to UK economy

The prime minister and home secretary join officers on an immigration raid.
The prime minister and home secretary join officers on an immigration raid.
Adam Bienkov By

Plans to drastically reduce immigration to the UK will do serious long-term damage to the economy, new research has found.

Conservative plans to reduce immigration to the "tens of thousands" would shrink the economy, reduce wages and lead to higher income taxes, according to the study by independent think tank the National Institute of Economic and Social Research (NIESR).

The findings came as a new consensus emerged between the three main parties in favour of harsh new restrictions on immigration.

Speaking over the weekend, the shadow chancellor Ed Balls insisted that a Labour government would match the Conservatives in being "tough" on immigration.

"There will be people who say... that freedom of movement is good for the economy. But that is not the consensus of the vast majority," he told the Telegraph, adding that: "What I want is fair movement not free movement."

He set out plans for new restrictions on EU migrants adding that "we have lots of rules that fetter movement. We think you should toughen up those rules."

Balls' shift in tone comes as the party seeks to deal with the growing threat from Ukip in its heartlands.

Politics professor Dr Matthew Goodwin told the Independent he believes that Labour could lose up to five seats to Ukip in next year's general elections as working class supporters desert the party on issues including immigration.

Liberal Democrat leader Nick Clegg also signalled a major shift away from his party's previous principled support for immigration to the UK.

He will this week call for much tighter EU restrictions, giving member states the right to "put the brakes" on immigration from other EU countries.

Today's NIESR study suggests that this growing consensus against immigration poses a serious threat to the country's prosperity.

They found that Conservative plans to halve the number of immigrants coming to the UK would have "strong negative effects on the UK economy" causing it to shrink by 11% by 2060, compared to current projections.

The reduction would leave a massive hole in the public finances, forcing the government to either increase public debt, slash services, or raise taxes, the study found.

According to the report, income taxes would need to increase by at least 2.2% to make up for the shortfall in tax receipts.

The reduction would also damage the wider economy, with average household incomes expected to drop by at least 3.3%.

The report also found that current policies to restrict immigration would drain the talent pool available to UK businesses.

"The long-term economic consequences of this are likely to be damaging," they found.

The researchers suggest that their findings may be serious underestimates, as they fail to take into account the potential economic benefits of continuing with high levels of immigration.

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