In the past two decades, the UK has experienced a steady flow of net migrants into the economy. Net migration is a significant factor in the growth of the UK population. But, does this net migration help or hinder the UK economy?
Migrants are more likely to be of working age – such as, students, and those looking for jobs. They may bring dependents, but generally net immigration leads to an increase in the labor force and increases the potential output capacity of the economy
Immigration inflows of people also lead to an increase in aggregate demand. Migrants will increase the total spending within the economy. As well as increasing the supply of labor, there will be an increase in the demand for labor – relating to the increased spending within the economy. Immigration should lead to an increase in real GDP. The impact on real GDP in the UK is uncertain.
Letting immigration could create a more flexible labor market. Migrants will be particularly attracted to move to the UK, if they feel that there are job vacancies in particular areas. For example, during the mid-2000s, there was a large inflow of workers from Poland and other Eastern European economies – helping to meet the demand for semi-skilled jobs,…