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EU migrants worth more to public finances than UK-born, study claims

Anna Isaac
If Brexit puts off valuable EU migrants, then tax rises might be on the cards to plug the gap, economists warn - Bloomberg

EU migrants pay more tax than the average British adult, leaving the UK’s public finances at risk and making post-Brexit tax hikes more likely, according to Oxford Economics.

Migrants from the EU contribute £2,300 more on average per year to the public finances than a UK-born adult, the study, commissioned for the Government’s Migration Advisory Committee, has claimed.

By contrast, a those born in the UK contributed £70 less than average and each non-EU migrant contributed £800 less than average.

Since migrants arrive in the country often having either completed their education, they often draw on less taxpayer funding than their native-born counterparts.

The migrant population is, on average younger compared to the aging native-born population, and often leaves the country before retirement age. This means as a group migrants add more to Government coffers than they draw down through pensions or other state benefits.

UK native-born people contribute £70 less than the average worker Credit: Oxford Economics

As a younger group, if they do determine to stay, migrants have many working years in which to contribute before incurring health or pension costs.

The study, which claims to be first to gather such evidence, has “estimated every element of tax and spending associated with each individual in a representative sample of the UK population”.

The research used a “snapshot” methodology, built on the tax and spend contribution of the migrant population in the 2016-2017 fiscal year. This was combined with historical information gathered on migration to predict the lifetime net contribution of migrants who arrived in the UK in 2016.

In their lifetime, migrants from the the European Economic Area (EEA) will make a net contribution of around £78,000. Migrants from elsewhere also make a positive contribution, of £28,000 per person.

The 2016 migrant cohort as a whole is expected to have a net benefit of £26.9bn for the UK finances.

There was also a gap between migrants from EEA old member states, who joined prior to 2004 and new member states that have joined since 2004. 

Those from old member states contribute on average 50pc more in income tax than the average migrant from a new member state. Those from new member states still contributed more than £1,000 above the average national adult.

Ian Mulheirn, of Oxford Economics, said: “Perceptions about migration play a huge role in the debate about Brexit, and the kind of migration regime the public wants to see.”

He said: “Our study shows that, when it comes to the public finances, European migrants contribute substantially more than they cost, easing the tax burden on other taxpayers.”

Mr Mulheirn added: “This strongly positive average contribution persists over a lifetime: most migrants arrive fully educated, and many leave before the costs of retirement start to weigh on the public finances. If the UK’s new relationship with Europe involves reduced migration, this analysis suggests the tax burden on others will have to rise.”