Official figures showed 402,000 people came to Britain from overseas, the highest since records began in 1964 and the biggest since the heyday of Commonwealth immigration in the Fifties. Experts believe the surge has been triggered by the tight labour market, especially for services industries.
The largest increases in immigration were from the "Old Commonwealth" - Australia, Canada, New Zealand and South Africa - and the European Union. The number leaving the UK fell, leaving a net immigration of 178,000 - another modern record.
The figure is almost three times the 65,000 net a year that Government actuaries forecast. These projections mayhave to be revised. Stripping out figures for asylum seekers, students and movements between the UK and Republic of Ireland, core immigration was 133,000, more than double 1997's 60,000.
These figures are taken from a voluntary sample survey conducted by the Office of National Statistics. "There appears to have been a noticeable increase from both the old Commonwealth and the EU. A lot of migration is work-related or to join a partner or immediate family," a spokesman said.
Britain's jobs market has been booming. Unemployment fell below 7 per cent in 1997, its lowest level since 1980, and continued to drop last year.
Economist David Owen, of Dresdner Kleinwort Benson, said: "The labour market is obviously tight in areas such as financial and business services and hi-tech sectors.
"People who work in these sectors will be quite mobile and very much attracted by higher salaries in London."
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