Britain


New report suggests the UK needs more migration due to ageing population

by Ray Clancy on July 1, 2016

Rising immigration from European Union countries is regarded as being the big issue that prompted the majority of the country to vote to leave the EU but a new report highlights the benefits of migration.

Migration could boost the British economy by £625 billion or 11.4% by 2064/2065, mainly due to the country having an ageing population, according to the report from the International Longevity Centre UK.

london-people-walkingThe research also found that fears that migrants from the European Economic Area (EEA) are crowding some British citizens out of the labour market are unfounded, as on average those local authorities with higher levels of employment amongst non-UK born citizens also have higher employment rates for the white UK born population.

The report describes the challenges posed by the UK’s rapidly ageing population and says that between 2000 and 2050 the number of over 65s is expected to double, while the working age population of 20 to 64 years will only increase by 20.1%.

The number of over 85s is expected to more than quadruple between 2000 and 2050 and between 1950 and 2013, the number of working age people for every person over 65 has fallen from 5.5 to three and this is expected to fall further to 2.2 by 2050.

It points out that as the UK’s dependency ratio, that is the number of people of working age for each person over 65, declines, tax revenues will fall and public debt as a proportion of GDP will rise. Increased demand for the State Pension and health and social care services from a rapidly ageing population also impact the sustainability of public debt.

The report also notes that while the UK Government has committed itself to raising the State Pension Age beyond 65, this will not stabilise the UK’s declining dependency ratio. Instead, the report argues that migration could help mitigate the spending pressures a rapidly ageing population create.

The report also points out that non-UK nationals living in the UK are more likely to be of working age than UK nationals with 76.5% of nationals from the EEA are between the ages of 15 and 64 compared with only 63.3% of British nationals.

EU citizens in the UK are more likely to be in employment than UK citizens. In 2015, the employment rate for EU citizens in the UK was 82%. For UK citizens in was 77% and between 2001 and 2011, migrants from the EEA put in £22.1 billion more in taxes than they took from the state.

‘Immigration is no silver bullet. The UK’s ageing population is a dramatic shift that will require a myriad of policies to help achieve desirable outcomes. However, we must recognise the benefits of immigration as a means of coping with the challenge. Migrants are typically of working age, in employment and make a net positive contribution to government finances by contributing more in tax than they take out in benefits,’ said Ben Franklin, head of economics of ageing at the ILC-UK.

‘In or out of the EU, the UK will have to accept that migrants will play a large role in the future of the labour market, as it does in most other developed economies. As long as the UK has a strong and growing economy, more people will want to come to the UK than to leave it. Since migration helps to support growth and the sustainability of public finances as our society ages, we need not fear it,’ he added.

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