Page last updated at 09:38 GMT, Tuesday, 18 December 2007

UK growth 'helped by immigration'

Without immigration, growth would be slower, the ITEM Club says

Britain would have seen slower growth and higher inflation, had it not been for the recent wave of immigration, a report has said.

The Ernst and Young ITEM Club also said the UK would grow by 3% a year if immigration continued to rise at the same rate as in the past two years.

Foreign-born workers appear to have filled about two-thirds of new UK jobs between 2002 and 2006, the report said.

They also may have made it tricky for UK youngsters to get entry level jobs.

And low inflation was achieved by keeping a lid on wage rises.

The ITEM Club estimates 1.5 million immigrants have arrived since 1997.

"Foreign workers come to the UK and obviously help us push up production levels," Professor Peter Spencer, chief economic adviser to the ITEM Club, told the BBC.

"They also help keep the lid on inflation."

However, the report also points out that the growth of immigration may have also increased unemployment among young UK workers.

"Given the age and skill profile of many of the new immigrants, it is possible that 'native' youngsters may have been losing out in the battle for entry-level jobs," it said.

Growth boost

The report suggests that economic growth could be 3% per year over the next decade if the rate of immigration seen between 2005 and 2006 is sustained.

Based on 1997 levels of immigration, economic growth should be sustained at 2.4% per year in the period to 2016, whereas with zero immigration potential growth would fall to 2.2%, the report said.

The most recent influx of workers is less skilled than in the past, with wages for arrivals from Eastern Europe 50% to 60% less than the UK average

Foreign-born workers now account for 11% of the workforce, ITEM said, while immigrants from the eight new EU countries made up 37% of new arrivals in 2006.

The report said there was a small fall in the number of employed persons of UK birth in normal working age groups between 2002 and 2006, while the employment of foreign-born workers rose by 740,000.

It also said 280,000 workers over the age of retirement have entered the workforce since 2002

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