The NIESR blog is a forum for Institute research staff to provide an informed, independent view on current economic issues and recent NIESR research. The views expressed here are those of the authors, and are not necessarily those of the Institute.
With a Conservative leadership contest in full swing and differing interpretations of what European election results mean for EU withdrawal, the public debate has yet again turned to a no-deal Brexit, i.e. leaving the European Union to trade on a minimum set of rules defined by the World Trade Organisation. These political shenanigans do not change the economic arithmetic whereby leaving the EU without a deal would inflict a significant economic cost compared to the alternatives.
EU migrants contribute positively to UK public finances. According to recent research, they pay more into the system through taxes than what they take out by using public services and receiving benefits. Furthermore, EU migrants’ contributions over their entire lifetime are usually much higher than those of natives, partly because most migrants arrive fully educated and many leave before the cost of retirement and old-age starts to weigh on public finances.
Still, the public’s opposition to EU migration is driven, in large part, by economic factors, often focused on migrants’ use of state funds, welfare and public services such as the NHS and schools.
The ONS has recently published its analysis of international migration and the education sector, looking at demand for school places, pupil attainment and staff. Its report makes explicit reference to high levels of public interest in the ‘impact and contribution’ of migration on the sector.
The stimulus policies introduced by China and other countries will more than offset the trade shock imposed by the US and as such a successful conclusion of the US –China trade talks that reverses current tariffs presents an upside risk to our GDP growth forecast.
Now that we are well into in the last year of this decade, it seems like a good moment to take stock of what has happened to global economic growth in the second decade of this century. Given all the change this decade has seen, it comes as a surprise to find that the average annual rate of global economic growth over the decade has been similar to that of the previous decade. And it may be even more of a surprise to learn that the year-on-year variation in annual global GDP growth has been very small.
The immigration debate continues to be dominated by arguments for and against freedom of movement, but what does immigration means for our schools and what are schools doing to promote integration? Our new research funded by the Paul Hamlyn Foundation on integration of new migrant students and their families, has collected evidence on what schools around England are doing to facilitate integration by creating a welcoming and inclusive environment and improving the performance of pupils.
At this week’s meeting, the Bank of England’s Monetary Policy Committee is unlikely to adjust the monetary policy stance substantially. Our latest economic forecast published last week suggests that the MPC should wait until the middle of next year before lifting Bank Rate above its current level of 0.75 per cent. This is because even though a soft Brexit seems more likely now it is offset by a weaker outlook for global demand and chronic levels of uncertainty at home.
Free movement has been at the heart of the Brexit debate. The government are in a tricky situation; grappling between a public which is assumed to want free movement to end, and businesses decrying demands for flexible migrant labour. In a labour market that relies on EU labour in sectors such as retail, hospitality and social care, the end of free movement raises major questions as to how labour market shortages will be filled.
“We can control immigration and have a system which welcomes people to the UK based on the skills they have, not the passports they hold”. This was one of the key points in the Vote Leave campaign literature almost three years ago. Two years later, the 2018 Immigration White Paper adopted this message. The foreword written by the Prime Minister reads: “This will be a system where it is workers’ skills that matter, not which country they come from”.
It is workers’ skills that matter, but some skills matter more than others. High-skilled, high-earning migrants are prioritised under the new system. But what does high-skilled mean?
Conventional wisdom has it that that British people are strongly against low-skilled migration, but much more accepting, and even supportive, of high-skilled migration. This preference continues to influence policymaking, as the UK government seeks to introduce a new skill-based immigration system post-Brexit, aimed at reducing the number of low-skilled migrants.
A new report by NIESR and Impetus on young people Not In Education, Employment and Training (NEET) reveals that young people with a disadvantaged family background are 50% more likely to be NEET than better off peers irrespective of their education outcome.
We know university degrees affect future earnings power, but could higher vocational education actually make your kids better off? New evidence shows it could.
A few weeks ago the BBC reported that young people are turning down the opportunity to study for a foreign language GCSE: its own analysis found drops of between 30% and 50% since 2013 in the numbers taking GCSE language courses in some areas of England. Employers voiced their concern that the future labour force will be ill-equipped for a post-Brexit Britain, and to forge trade deals across the world.
Earlier this week, in the midst of the unfolding political crisis over Brexit, I was invited to discuss evidence on the impact on service trade at a session of the House of Commons International Trade Committee, alongside other researchers and academics, trade policy experts and a number of business representatives.
The hospitality sector is one of the highest employers of EU migrants with the most recent Employer Skills survey finding a third of hotels and restaurants employ at least one person from the EU and they represent 19% of the workforce. So it is no surprise to find that hotels, restaurants, coffee shops and bars are among the businesses most affected by any reduction of migration ushered in by Brexit.
As images of unrest in the streets of Paris and other French cities continue to flood in the European media, the data on France contained in our latest global forecast, published last week, painted a subtler but still concerning outlook for the French economy.
Over most of the period since World War II, UK productivity performance has been disappointing. Two episodes stand out, namely, the acute phase of relative economic decline during the 1950s through the 1970s and the ‘productivity puzzle’, that is the flatlining of productivity since the onset of the financial crisis in 2008.
In July 2015 the UK government announced the introduction of a new statutory ‘National Living Wage’ (NLW) that would apply to those aged 25 and over from April 2016. At a rate of £7.20, this represented a significant increase of 7.5% over the existing National Minimum Wage rate (and a 10.8% increase on the rate prevailing a year previously - in April 2015).
A comparison of 16 to 18-year-old students following A-Level or vocational and technical routes shows us that Non-A-level students need more options for progression