A decline in UK immigration and an aging population will be an economic concern by 2014, a new report says.
15 June 2010
Cut in UK immigration will cause slowdown in growth, says agency
A ban on UK immigration and an ageing society will catch up with the UK economy in 2014 causing a slowdown in growth, the Office for Budget Responsibility has said in a report.
The Office for Budget Responsibility argues that changing demographics will have a profound effect on the UK economy's ability to grow, and that the resulting weak pound and low job prospects will discourage migrants from coming to the UK.
Since net UK immigration peaked in 2007 at 233,000, it has fallen sharply and is expected to bottom out at 50,000 within the next couple of years. The report, which uses information from the Office for National Statistics, also suggests that the increasing numbers of retired baby-boomers will eat into growth and provide additional costs of providing pensions.
The overall effect of an ageing society "points to a decline in labour market activity of around 0.15% a year," the report said.
The Office for Budget Responsibility (OBR) was formed in May 2010 to make an independent assessment of the public finances and the economy for each Budget and Pre-Budget Report.