Record immigration adds to fears over rising pension costs

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The Independent Online

A record number of immigrants moved to the UK last year, prompting the Government to raise its long-term population forecasts. The revisions will raise hopes that the extra workers will help boost economic growth and curb inflationary wage pressure but add to worries over the impact of an ageing population on the pensions system.

The number of people coming to the UK last year jumped by 70,000 to 582,000, while the number leaving was unchanged at 360,000 - a record net influx of 223,000 people.

Meanwhile, the number of British citizens leaving these shores also hit a record as 208,000 quit the UK for a new life abroad. The biggest increase was an estimated 52,600 immigrants from the 10 mainly Eastern European countries that joined the EU in May that year.

Immigration from the "new" Commonwealth that includes former colonies in Asia and Africa rose by 40,000 to 143,000 last year, marking another record.

The figures reopened the politically controversial debate over the volume of immigration into the UK. Humfrey Malins, the Conservative immigration spokesman, said: "This is an indictment of the absolute shambles that is the immigration system under Labour. Net immigration levels are five times what they were when Labour took power." But a Home Office spokesman said: "New immigrants bring considerable benefit to the UK, whether contributing to our wealth, our culture or our diversity."

This week the Bank of England cited higher inflows of migrant workers as a possible reason for forecasting lower inflation rates. In August Mervyn King, the Governor, said: "Inward migration has been important in easing labour shortages, helping to prevent what would otherwise have been a pick-up in wages."

Bank officials have repeatedly said the removal of borders with key Eastern European nations such as Poland and Lithuania would attract skilled and unskilled workers to fill gaps in the labour market.

Danny Sriskandarajah, at the Institute for Public Policy Research in London, said: "This not a system out of control or an issue of a 'soft touch'. This is about economic fundamentals at work - low unemployment, high levels of vacancies and not particularly surprising high volumes of people coming to fill those vacancies."

The Government Actuary's Department raised its forecast for the increase in population by the year 2031 by 1.3 million to 7.2 million. It said that more than half - 4.1 million - would come from net immigration and 3.1 million from natural increase.

It forecast an ageing population, as the number of pensioners increased by 9 per cent over the next six years. The ratio of workers to pensioners will fall dramatically from 3.33 now to just 2.4 by the year 2040.

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