How immigrants sustain Britain's economic growth

Andrew Grice,Jonathan Brown
Wednesday 23 August 2006 00:00 BST

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Louise Thomas

Louise Thomas


The positive impact of the influx of migrant workers from eastern Europe on the British economy has enabled Gordon Brown to hit his growth targets, according to a new study.

It suggests that the Chancellor may have missed his key economic goals without the boost from the estimated 600,000 migrants from the eight former Soviet bloc nations who have come to Britain since their home countries joined the European Union two years ago. They now account for about 2 per cent of the UK's 30 million-strong workforce, contributing an estimated £2.5bn a year to the economy.

Business leaders also called for Britain to maintain its open-door policy for key foreign workers. Business for New Europe, which counts the former Tory minister Leon Brittan as well as chief executives and chairmen from blue-chip companies including Reuters, Carphone Warehouse, Sainsbury and the London Stock Exchange on its advisory panel, said further migration was a "cause for celebration, not cowardice".

Meanwhile, the construction industry indicated that there could be insufficient capacity to complete the Government's building programmes without new migrant labour. There are plans for 30 major hospital projects, including the £1bn scheme at Barts in London. Only last week the Government announced a further six projects worth £1.5bn, as well as plans for 50 new community hospitals. Labour is also committed to a programme of school building and refurbishment, as well as the scheme to regenerate the Thames Gateway, where 40,000 new homes will be built on former brownfield sites.

Maurice Fitzpatrick, senior tax manager at the accountancy firm Grant Thornton UK LLP, concluded that foreign workers were vital for Mr Brown to achieve his targets. "It seems likely that immigration has contributed 0.5 per cent to 1per cent to UK economic growth in each of the years 2005 and 2006. In terms of Brown's 2005 economic growth forecast, this was definitely needed in order for it to be achieved, and for the 2006 growth forecast it played a significant (perhaps crucial) part in its achievement."

Although the number of people claiming unemployment benefit has also risen slightly over the past two years, Mr Fitzpatrick said this might have happened anyway, since the economy had been growing at below its trend level, estimated by the Treasury at 2.75 per cent a year, even after the "immigration effect".

He added that migration had exerted a downward push on wage rates, which may have aided Britain's international competitiveness and helped to keep interest rates low.

Roland Rudd, chairman of Business for New Europe, said the rewards could be felt across the economy. "As well as Polish plumbers and property investors, the UK economy benefits from Hungarians in hospitality, Estonian engineers, Czech caterers and Slovakian scientists. This is because of our open labour markets following the EU enlargement of 2004. We have reaped the reward of this approach. We should abandon it at our peril."

Meanwhile, the National Farmers' Union said that at this time of year its members were dependent on as many as 70,000 migrant workers to bring in the harvest. "It is a plain fact that without these people a lot of businesses would not be able to operate and a lot of British food would not be on the shelf," said Philip Hudson, the NFU's chief horticulture adviser. "The myth to put to bed is that UK farmers don't look for UK labour ­ they do."

According to Gerry Lean, industrial relations director of the Construction Confederation, 10 per cent of employees on UK building sites are thought to be from overseas ­ up to 100,000 workers, many of them with vital craft skills. "If we didn't have these people we would suffer very badly," he said.The study will be seized on by supporters of a liberal policy on migration as evidence that the Government should extend its "open door" policy to workers from Romania and Bulgaria, which are due to join the European Union in January.

Mr Fitzpatrick acknowledged that some of the 427,000 registered workers, which does not inlude self-employed workers such as builders, had come to Britain from the former Soviet bloc countries and had taken low-paid jobs, but said that a relatively high proportion were based in London and the South-east, areas which enjoy the highest pay in the country.

The findings may go some way to allaying the fears of Labour MPs who are warning that Britain is suffering from "migration fatigue" and that British workers are being squeezed out by eastern Europeans.

The human face of success from abroad

Mary Ivanova Teacher, 54, arrived four years ago from Bulgaria

I was an English teacher and worked for 32 years in a school in south-east Bulgaria, in a town called Yambol. My children are grown-up, one is married, so I thought I didn't have to look after them any more. I felt free to look for my own future. I had a friend in London and it took me only a week to find work here. I teach English as a second language to foreigners, and Bulgarian and Russian to English people. Most Londoners are very polite, I know of only one person who doesn't like foreigners and makes no secret of it. I have friends from many countries because of my job, but I also have many Bulgarian friends. We support each other emotionally and practically. I am glad I came, it gave me lots of opportunities to develop myself.

Mohamed Maigag Charity Director, 38, arrived 21 years ago from Somalia

My parents and I were asylum-seekers - my father would have been prosecuted if we'd been sent back to Somalia. It took us four years to gain refugee status. I completed my education in Britain: I read religious and Islamic studies at the University of Wales before undertaking postgraduate study. After that I worked as a freelance interpreter in various courts, including the Old Bailey. I eventually set up my own interpretation business. I helped to develop the Haringey Somali Community and Cultural Organisation, working as a youth leader there. I am an avid Arsenal fan, and also tour with my Somali band - we will be playing at the Museum of London later this year.

Mario Nova Building Consultant, 26, came three years ago from Poland

I think England is a really good country as the Government is helpful for Polish people.

When I first came here it was difficult to find work. I didn't have any friends here and it was a struggle to survive. A lot of Polish people in London get really bad jobs and are pushed to the edge, you have to have a strong personality.

I eventually found employment in construction and set up Polish Staff, a free service which helps skilled Polish workers to find work. I work 12-14 hours a day and pay taxes, every Polish friend I have pays taxes. I didn't come here for benefits and I've never used the NHS; I came here for something different.

Salah Hashimi Lawyer, 32, came to Britain from Iraq 16 years ago

I studied architecture at university but was inspired to become a lawyer while an undergraduate. I had an excellent professor, a wonderful old gentleman who really supported me. Because of him, I decided to become a solicitor.

At first, being Iraqi, it was very difficult to be recognised as a good lawyer, so I started my own practice. I called it Pinnacle, because I think we are capable of attaining the height of legal principles.

Today I deal mainly with civil litigation and human rights cases, many involving newly arrived Iraqi immigrants. I feel closest to them because of the difficulty they have integrating into British society. I try to maintain close relations with my family back in Iraq, but I have not been there since 1990.

Ovidiu Sarpe Restaurateur, 59, left Romania 27 years ago for UK

I left five kids without a mother in Romania back in 1979 - I needed to work hard for them. Ceausescu had promised free speech and travel in 1977, but it didn't come. At that time it was quite a crime to ask "why?" - I did and I lost my job. It was getting difficult and I needed to leave the country. I got a job as a waiter at a hotel. It's been tough and I've worked very hard. Sometimes I wish I could've given my children more time. When you work in Romania you get paid €100 a month. It's a huge difference here - you work on a building site for a month and can buy an apartment - anyone would be attracted by that.

The experts' view

Industry: Richard Lambert, Director General, CBI

"The UK has benefited from the hard work of migrants. They have helped with skills shortages across the economy. But it is only right that the UK now takes the time to reflect on how and when to welcome the next phase of EU accession countries."

Healthcare: Dr Beverley Malone Royal College Of Nursing

"UK nursing has been shaped and influenced by overseas nurses. Beyond any doubt, the contribution they make is as staggering as it is welcome. In some parts of the country health services would be struggling without overseas nurses."

Education: Brian Lightman, Head of St Cyres school in Penarth, Vale of Glamorgan

"We have students whose background brings different languages, religions and cultures from each of the continents.We take pride in preparing our students for life in our multi-cultural society."

Armed Forces: Colonel David Allfrey Deputy in Charge of Army Recruiting

"We have a great tradition in the forces of recruiting from our minorities as well as abroad, and they have provided excellent service to this country. I am learning a lot more about just how wonderfully rich and diverse our culture is."

Arts: Brian Sewell, Art Critic

"I don't think there have been many artists among the recent European immigrants. However, a number from Africa, India and the West Indies are now quite celebrated; Chris Ofili, above, [born in Britain to Nigerian parents] for example."

Science: Professor Julia Higgins Vice-President and Foreign Secretary of The Royal Society

"Science is a truly global endeavour, and the UK has benefited from the circulation of scientific talent. Nobel Prize winners such as the American James Watson, above, help create intellectual hotspots."

Sport: David Moorcroft CEO, UK Athletics

"One thing I am proud of is that we are the most diverse and equitable of sports. Immigration over the past 30 or 40 years has been a huge benefit to athletics. We would not have had the success we have if immigration policy had been more restrictive."

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