Immigration not a Cure All for UK Economic Woes OBR Official Warns

The belief that rising immigration alone can resolve Britain’s sluggish economic growth and mounting fiscal pressures has been challenged by a leading figure at the Office for Budget Responsibility. David Miles, a member of the OBR’s spending committee and a former Bank of England policymaker, says the government must focus on boosting employment among those born in the UK, rather than depending solely on imported labour to mend structural labour force gaps.

In an essay for the Common Good Foundation, Miles stressed that elevating the earnings of people already resident in Britain could yield fiscal benefits equal to those gained by increasing the migrant workforce. “The fiscal benefits of raising the incomes of those born in the UK and who might be on a trajectory of consistently below average wages are as great as the benefits of having more people come and stay in the UK with average or, especially, well above average earnings,” he wrote.

Living standards have stagnated for most households since the 2008 financial crash, a trend attributed in part to weak productivity growth. Miles acknowledges that immigration often involves those of working age, thus delaying the full impact of an ageing population while also being a significant driver of population growth.

He cautions, however, that rapid increases in population are not a guaranteed solution to long-term fiscal problems. “Even setting aside the fact that it is GDP per capita that matters for average standards of living – and growth in population does not obviously boost it – there are serious problems with the idea that faster population growth can consistently alleviate fiscal problems,” Miles argues.

The consensus among economic bodies such as the OBR, IMF and the OECD is that migration can support growth and public finances if new arrivals are skilled and productive. Recent data from the Office for National Statistics revealed that the population of England and Wales swelled by over 700,000 in the year to June 2024, marking the second largest annual increase since records began in 1949. This record rise in net migration has been a focal point in ongoing national debate.

Meanwhile, the OBR’s latest economic forecasts and the chancellor’s fiscal strategy remain under scrutiny. At the spring statement in March, the OBR reported that Rachel Reeves had a £9.9 billion margin against her fiscal rules. However, analysts now warn that this buffer may have switched to a shortfall, potentially leading to further tax increases in the autumn budget.