Cutting immigration would explode the debt

Ever wondered what would happen to the British economy if net immigration were slashed to zero? Well today’s ‘Fiscal Sustainability Report’ from the number crunchers at the Office for Budget Responsibility provides a glimpse of what such a future might look like — and it is a grim picture indeed.

They’ve put together projections for the economy — and the public finances — all the way to 2062. Of course such long-term predictions should be taken with a pinch of salt. As Pete says over at ConservativeHome, ‘today’s OBR figures will probably bear as much comparison to the 2060s as the Jetsons will’. But the OBR don’t just produce one forecast for the shape of things to come, but several, based on different assumptions about productivity growth, ageing and immigration — allowing us to see how different policies would affect the economy.

Take the national debt, for example. Here’s how the OBR’s central projection (which assumes net migration of 140,000 a year on average) compares to its high migration (260,000 a year) and zero migration ones:



In a future with no net migration, we’d be looking back longingly on the days when the public debt was ‘only’ 65 per cent of GDP. In fifty years time, according to these forecasts, it’d be 187 per cent. Under the high migration scenario, though, it’d be down to 54 per cent.

The main reason for this is that the OBR reckons that the high migration scenario would see much higher economic growth than the zero migration one, to the tune of 0.6 to 0.8 percentage points a year:



So those who call for lower — or no — immigration should be careful what they wish for. And that includes the Prime Minister. Even the OBR’s central projection — which has debt rising to 89 per cent of GDP by 2062 — assumes that he’d fail in his ‘ambition’ to reduce net migration to the tens of thousands. If he were to succeed, it would take even more than the extra £17 billion of cuts the OBR says we need to get it down to 40 per cent by then.