Memorandum by Business for New Europe
INTRODUCTION
— Business for New Europe (BNE)
welcomes the opportunity to respond to the House of Lords Economic
Affairs Committee inquiry on the subject of the economic impact
of migration on the UK economy.
— BNE is an independent coalition
of UK business leaders. Our aim is to support the UK's active
engagement in Europe, and to promote a reformed, enlarged and
free-market EU. We recognize the benefits that cooperation with
our European partners brings. Since our launch in March 2006,
we have become a leading pro-Europe organization in the UK, gaining
a good deal of press coverage for our views. We have a number
of leading business figures serving on our Advisory Council (for
more information see www.bnegroup.org ).
BNE'S VIEWS
ON MIGRATION
— Free movement of people, enshrined
in the Treaty of Rome (1957), is a fundamental principle of the
EU, and this should be encouraged. It is part of the EU's overall
vision of free movement of goods, services, capital and people.
— The free movement of people
principle has had far-reaching effects on immigration. At the
same time, it has also affected emigration from the UK. Many British
people have taken advantage of the freedom to move within the
EU, by working, studying and living in other EU member states.
There are an estimated 677,000 Brits in Spain, 301,000 in France
and 132,000 in Germany. In total, 1.57 million Brits are living
in other EU countries.
— BNE has taken a clear and consistent
approach advocating open labour markets, because in the long-run
this approach will lead to greater economic growth, productivity
and entrepreneurship. For instance, see appendix 1 for an example
of a letter in the FT.
THE A8 MIGRATION
— Following the EU's enlargement
of 2004, the UK took the lead in opening its labour markets to
workers from the A8 (eight eastern European countries which entered
the EU in 2004). The UK has benefited from being one of only three
member states (along with Ireland and Sweden) which immediately
opened its labour market to Eastern European workers.
— Despite the government badly
under-estimating the number of workers moving to the UK for work,
the UK economy has benefited from the influx of workers from Eastern
Europe since 2004.
— The EU's enlargement since 2004
to take in the countries of eastern Europe has been an undoubted
success. It has benefited not only the incoming countries, but
also the established member states.
— The migration has contributed
to UK economic growth. Last year the highly respected Ernst and
Young item club reported that the 2004 migration "has proved
remarkably positive for the economy, keeping interest rates a
0.5% lower than they would otherwise have been."
— According to official statistics,
683,000 people from the eastern Europe have registered for work
in the UK since 2004. Most are young and single, and anecdotal
evidence suggests very hard-working. 82% are aged 18-34, only
8.4% of the total have dependents, and only 1.3% of all the migrants
apply for income support and jobseekers allowance.
— Despite the fears, evidence
suggests that this wave of migration has not created unemployment.
ADWP study (Working Paper Number 29) concludes: "We have
found no discernable statistical evidence to suggest that A8 migration
has been a contributor to the rise in claimant unemployment in
the UK."
— Some of the migrants have been
working in the UK public services, such as the hospitals, schools
and the transport network. From June 2006 to June 2007, 2,400
A8 nationals registered to work as bus and lorry drivers, whilst
5,100 registered as care workers.
— The influx of migration has
had a positive impact on particular sectors of the economy. For
instance Sir John Gieve, the Bank of England's Deputy Governor,
said in a speech in March 2007: "The single most important
factor [in helping the City's growth is] its skilled labour and
financial know how... The free movement of labour within the European
Union and relative openness to immigration by those with specific
expertise from outside it, has also meant that employers in the
financial sector can access the world labour market. And the relative
flexibility of the labour market here in the UK compared to others
in Europe may also be a factor."
— Since 2004, more and more countries
have abandoned restrictions and opted to follow the UK's enlightened
policy of openness towards the A8 (countries with no restrictions
on A8 nationals include Spain, Portugal, Greece, Finland, Italy,
in addition to Ireland, Sweden and the UK).
BULGARIA AND
ROMANIA
— BNE believes that Bulgarians
and Romanians should have unrestricted access to the UK and be
given the same rights as other citizens of Europe. It would send
a positive anti-protectionist message to the rest of Europe, and
to Romania and Bulgaria too.
— We were, therefore, disappointed
when the government announced restrictions on Bulgaria and Romania
in September 2006, and issued the following statement: "Some
Romanians and Bulgarians will no doubt want to work in other EU
countries, including the UK. This is in accordance with the free
movement of workers which is a fundamental principle of the EU.
As with previous enlargements, such migration can be expected
to make an important contribution to the British economy, filling
crucial skills gaps in the labour market. The UK can only benefit
from the cream of eastern European talent. We urge the government
to open our labour markets at the earliest opportunity. This development
should be viewed with celebration rather than cowardice."
— The balance of evidence suggests
that their influx would further benefit the UK economy. The key
precedent is that the previous enlargement of 2004 has been an
economic success and plugged gaps in the UK labour market. Of
course these effects have not been confined to the economic realm,
and the migration has had some important social implications which
the government must address.
— The number of Bulgarians and
Romanians to come to the UK since January 2007 has been limited.
Only 9,600 people came to the UK from these countries between
April and June 2007. So there has been a steady flow from these
countries, which put the excessive estimates from some groups
of 300,000 migrants coming to the UK from Bulgaria and Romania
in their proper context.
CONCLUSION
— BNE believes that the immigration
to the UK from other EU member states has been of great economic
benefit to the UK economy.
— We would like to see a full
opening up of the UK's labour market, which would put Bulgarians
and Romanians on an equal footing to the rest of EU citizens.
The fact that we are moving to a situation of open labour markets
across the entire Union is something that we whole-heartedly welcome.
— The enlargement of the EU has
been one of the Union's most successful policies and furthermore
its effect of increasing immigration to the UK, has also been
an economic success for the UK.
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