BREXIT BOOM

UK to HALVE net migration post-Brexit: Report bashes Project Fear scaremongering

BREXIT will enable Britain to halve net migration, enjoy higher wages and ease pressure on housing, top academics have forecast in a report.

They slammed gloomy predictions made by the Treasury before June’s referendum about the impact of a vote to leave the European Union.

The Centre for Business Research at Cambridge University’s Judge Business School also suggested the world economic outlook would have looked less than rosy even if Britain had opted to stay in the EU.

As part of Project Fear to scare voters into backing Remain, then chancellor George Osborne said Treasury analysis showed Brexit would leave the UK “permanently poorer” to the tune of £4,300 per household by 2030. But the report said the Treasury findings failed to take account of the whole picture and had “little basis in reality”.

They used their own economic forecasting system – which they believe superior to those used by the Government, the Office for Budget Responsibility and the Bank of England – to paint a much brighter future for the UK outside the EU.

Brexit was “a unique event with no precedent” so it was impossible to make a “normal forecast”, they suggest.

The only option was to suggest possible “scenarios” based on assumptions about future trading arrangements, migration controls and the effect of uncertainty on business behaviour.

They said that the Treasury had been far too pessimistic.

The Treasury had warned Brexit would hit business investment, trade with the EU, sterling, and consumer spending, and cause inflation hikes, recession, a huge rise in unemployment and GDP six per cent lower than if Britain stayed.

The report states: “Five months after the referendum, only one of the Treasury’s expectations has been realised… the fall in the value of sterling… although this brings forward a depreciation that would eventually have occurred.”

The falling pound would accelerate a rise in inflation – but also have the positive effects of reducing Britain’s balance of payments deficit long term “to a manageable level” and boosting net earnings on UK foreign investment.

The academics built into their calculations an assumption that controls on migration from the EU would be imposed in mid-2019 after Britain leaves, leading to net migration falling to around 165,000 from 2020, and with numbers arriving from EU countries and returning to them roughly even.

“This does not of course imply no migration to or from the EU, merely that inflows and outflows are balanced,” they wrote.

They anticipate earnings rising by more than two per cent as employment rates peaked in 2017 “and especially as migration reduces from 2019”, giving workers more bargaining power to demand higher wages.

“The UK labour market has become dependent on foreign-born labour, with the increase in foreign-born workers equivalent to over 80 per cent of additional employment since 2004,” they wrote.