EU immigrants contribute £20bn to British economy, says research

EU immigrants in the UK paid more in taxes than they received in welfare benefits, new research by the UCL Centre for Research and Analysis of Migration (CReAM) has revealed.

Their contribution helped relieve the fiscal burden on UK-born workers and contributed to the financing of public services.

The research shows that between 2001 and 2011, EU immigrants in the UK contributed more than £20bn to UK public finances.

They have also endowed the UK with productive human capital that would have cost it £6.8bn in spending on education.

Over the period from 2001 to 2011, European immigrants from the EU-15 countries contributed 64% more in taxes than they received in benefits. Immigrants from the Central and East European ‘accession’ countries (the ‘A10’) contributed 12% more than they received.

The findings of new analysis by Professor Christian Dustmann and Dr Tommaso Frattini of the fiscal consequences of European immigration to the UK, were published by the Royal Economic Society on 5th November 2014 in the Economic Journal.

The research shows that 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.

It also emerges from the research that 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 and have higher employment rates (81% for A10, 70% for EU-15 and 70% for UK natives in 2011).

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.”

Professor Dustmann added: “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.”

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