Migration and Trend Growth in the UK

The BoS group have this piece on UK migration.

Polish plumbers: mending your pipes and keeping your mortgage down

Migration is adding 180,000 to the UK population each year and has been boosted by workers from eight eastern European states (A8) which joined the EU in 2004. These recent migrants are young, often highly qualified and hard-working. 􀂄 But they are employed mainly in low skilled, low paid jobs that can be arduous and which many indigenous people will not do. Employers say they like recent migrants’ work ethic, contrasting this favourably with the soft skills such as motivation of some UK-born people. 􀂄 Migration raises the economy’s capacity to grow without stoking inflation, keeping interest rates lower than they would have been, saving an estimated £500 per year on the average mortgage. This yields an extra £16b of output over five years, enough to pay for the 2012 Olympics facilities five times.


and they link to: Trend growth: new evidence and prospects. UK Treasury.

There has also been significant new evidence published since Budget 2006 on migration flows and population trends. This evidence is strong enough to lead the Treasury to revise the current working-age population projection for the post-2006 period. Analysis of these new data support a higher contribution of net inward migration to growth in working age population post-2006, leading to an upward revision to working-age population growth post-2006 from 0.4 per cent to 0.6 per cent a year. This upward revision offsets the downward effect of post-war baby-boom women retiring that was previously driving the fall in the trend output growth assumption post-2006. Therefore, the upward revision to working-age population growth implies an increase in the post-2006 neutral estimate of trend output growth from 2| per cent to 2~ per cent a year.