Academic analysis finds EU immigration has had a positive economic impact

As widely reported by news media today, new analysis from the Centre for Research and Analysis of Migration (CReAM) at University College London has found that immigration to the UK from the European Union (EU) and European Economic Area (EEA) has had a positive economic impact.

You can read the full 51-page study, The Fiscal Effects of Immigration to the UK, here.

The analysis revealed European immigrants who arrived in the UK since 2000 have contributed more than £20bn to UK public finances between 2001 and 2011. New non-EU immigrants in this period contributed £5bn.

However, as noted by BBC News and chosen as the lead by some media such as the Daily Mail, the study also found that all non-EEA immigrants, no matter how long they had been in the UK, made a negative net contribution of £118bn from 1995 to 2011 (for comparison, British people made a negative net contribution of £591bn during the same period).

Sky News' economics editor, Ed Conway, explains on his blog here how and why media outlets ended up reporting the findings of the study in such different ways.

"Having sat through the briefing on this, spoken to the report’s lead author a couple of times and read through the study itself, I believe I may be in a decent position to clarify things ... The short answer is: version one (immigrants more than pay their way) is by far the more accurate version of the story," Ed Conway stated, adding that the CReAM study found all new immigrants from all regions over the past decade brought in more money than they took out.

A CReAM press release noted the main points of the analysis were:

• The positive net fiscal contribution of recent immigrant cohorts (those arriving since 2000) from the A10 countries amounted to almost £5bn, while the net fiscal contributions of recent European immigrants from the rest of the EU totalled £15bn. Recent non-European immigrants' net contribution was likewise positive, at about £5bn. Over the same period, the net fiscal contribution of native UK born was negative, amounting to almost £617bn.

• Immigrants who arrived since 2000 were 43% less likely than natives to receive state benefits or tax credits. They were also 7% less likely to live in social housing.

• European immigrants who arrived since 2000 are on average better educated than natives (in 2011, 25% of immigrants from A10 countries and 62% of those from EU-15 countries had a university degree, while the comparable share is 24% among natives) and have higher employment rates (81% for A10, 70% for EU-15 and 70% for UK natives in 2011).

• The value of the education of immigrants in the UK labour market who arrived since 2000 and that has been paid for in the immigrants' origin countries amounts to £6.8bn over the period between 2000 and 2011. By contributing to 'pure' public goods (such as defence or basic research), immigrants arriving since 2000 have saved the UK taxpayer an additional £8.5bn over the same period.

• Considering all immigrants who were living in the UK over the years between 1995 and 2011, a period over which the net fiscal contribution of natives was negative (and accumulated to about £591bn), EEA immigrants contributed 10% more than natives (in relative terms), while non-EEA immigrants' contributions were almost 9% lower.

• Over the same period from 1995 to 2011, immigrants who lived in the UK endowed the UK labour market with human capital that would have cost about £49bn if it were produced through the UK education system, and contributed about £82bn to fixed or 'pure' public goods.

Professor Christian Dustmann, Director of CReAM and co-author of the study, said: "A key concern in the public debate on migration is whether immigrants contribute their fair share to the tax and welfare systems. Our new analysis draws a positive picture of the overall fiscal contribution made by recent immigrant cohorts, particularly of immigrants arriving from the EU."

"Responding to comments on our earlier report on this topic published last year, we performed extensive sensitivity analysis, which does not alter our main conclusions: immigration to the UK since 2000 has been of substantial net fiscal benefit, with immigrants contributing more than they have received in benefits and transfers. This is true for immigrants from Central and Eastern Europe as well as the rest of the EU."

"When we additionally consider that immigrants bring their own educational qualifications whose costs are borne by other countries and that they contribute to financing fixed public services such as defence, these contributions are even larger."

"European immigrants, particularly, both from the new accession countries and the rest of the European Union, make the most substantial contributions. This is mainly down to their higher average labour market participation compared with natives and their lower receipt of welfare benefits."

According to the Telegraph, Immigration Minister James Brokenshire said the report was 'too narrow' and ignored pressure on services.

The Telegraph quoted him as saying: "I think it is important to say that this report has taken a very narrow focus. It has not properly addressed the issue of the pressures on public services."

"Those things that I think very rightly concern the public on access to schools, hospitals, roads, housing, [show] why we do need a sustainable immigration system, bringing it down from the hundreds of thousands to the tens of thousands."