Public finance watchdog says UK needs immigrants
The David Cameron government, which has vowed to reduce immigration from non-EU countries like India, has found itself in a piquant situation as a public finance watchdog created by it has suggested that Britain needs immigrants to cut large public debt.
The Office for Budget Responsibility (OBR), which was created in 2010 to provide independent and authoritative analysis of the UK's public finances, said in its latest Fiscal Sustainability Report that higher levels of immigration over the next 50 years would spare taxpayers from the need to endure much greater austerity.
Since coming to power in 2010, the Cameron government has initiated several steps to prevent abuse of immigration rules and introduce new restrictions intended to reduce immigration from non-EU countries, including India.
The report said: "Higher net inward migration than in our central projection – closer to the levels we have seen in recent years, for example – would put downward pressure on borrowing and PSND (public sector net debt), as net immigrants are more likely to be of working age than the population in general."
Britain's ageing population, the 'official independent fiscal watchdog' said, will put growing financial pressure on future taxpayers and governments, and Britain will need to undergo an extra 17 billion pounds of spending cuts and tax rises to bring down the national debt to 40 per cent of gross domestic product by 2062.
The OBR's analysis showed that with annual immigration of 260,000 the UK's population, presently 62.3 million, would reach 85.8 million by 2060, and the working age population (16-65) would be 50.3 million.
If annual migrant flows were 140,000, the British population would reach 77.2 million and the working age population would be 44.5 million.
With zero migration the population would rise to 64.1 million and the working age population would fall to 41.4 million.
The OBR also forecast that if net inward migration were cut to zero over the next five decades, the scale of the public austerity facing Britain would need to be three times larger, at 46 billion.
If all migration ended tomorrow, the UK's average annual growth rate would fall to 2 per cent and the national debt would spiral to 120 per cent of GDP by the middle of the century, it said.