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BOE Chief Economist Says Higher Migration Will Boost UK Economy - BLOOMBERG

MAY 23, 2023

(Bloomberg) -- Bank of England Chief Economist Huw Pill said higher-than-expected migration had added 20 basis points to the Bank’s economic growth forecasts, underscoring the UK’s need for workers to fill jobs.

Testifying to lawmakers in Parliament’s Treasury Committee on Tuesday, Pill said upward revisions to the Office for National Statistics’ population projections — driven by net immigration — “led to an increase in the level of GDP of about two tenths of a percentage point” by the end of 2025 relative to its previous forecast.

Official data now suggests net migration into the UK is expected to level out at about 245,000 a year by 2028, up from the 205,000 previously estimated. Figures due out on Thursday are expected to show net migration rising again to another all-time record, jarring with Prime Minister Rishi Sunak’s ambition to limit that flow. 

The migration numbers have taken on added importance after more than 500,000 people dropped out of the UK workforce since the pandemic, leaving companies to bid up wages to secure the staff they need to fill jobs. That’s added to upward pressures on inflation, which at 10.1% is five times the Bank of England’s target. A bigger workforce would allow the economy to grow more before inflationary pressures kick in.

For now, rising migration is helping the economy. Most of the boost to growth is likely to come from migrants adding to the supply-side of the economy, Pill said. He noted they would also increase demand by consuming more.

Migrants are “contributing to the productive capacity of the economy but also demand in the economy,” Pill said. “That washes out in terms of pressure on resources and therefore on inflation, so it really is more of a growth story.”

Read more: 

  • Record UK Migration Surge Set to Expose Government Divisions
  • Cost of Living is Helping Bring Down UK Inactivity, ONS Says
  • Bailey Says BOE Must Sharpen Response to Big Economic Shocks 


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