The End Game of UK Economics

UK population growth has accelerated.

From 1971 to 2000 the average annual growth rate stood at 0.18% but from 2001 to the present day it averaged 0.66%.

This has recently caught headlines following back to back years of over 1% growth, representing the highest level of population increase since the late 1940s.

The difference is that this time it wasn't because of a baby boom.

It has been driven almost exclusively by net migration.

That is, the total number of long term arrivals minus the number of long term departures.

Since the Brexit referendum in 2016, when swathes of British people voted to leave on the premise of reducing immigration, net immigration has totaled over 3 million people.

So did Brexit somehow open the borders by accident? Not exactly.

What really happened was that in 2021 a single points-based system was introduced to judge EU and non-EU citizens by the same criteria for the first time.

On its own that's not obviously a recipe for more migration.

For EU citizens it was actually way harder to move to the UK since they were no longer allowed to move to the UK visa-free.

And it showed in the data.

Since the Brexit referendum EU immigration to the UK has consistently declined and from 2022 there's been more EU citizens leaving the UK than have been entering.

But EU citizens were the exception.

The new points-based system allowed the UK government to have more control over their own migration policy.

With this, they relaxed the rules and opened new migration pathways which made it easier for non-EU citizens to migrate.

Now you're probably wondering, why did they relax the rules and open new pathways? Well, we can answer this by honing in on three types of migration.

Educational migration, labour migration and humanitarian migration.

In the UK education sector and for UK labour markets, immigration was good for business.

In 2021-22 the UK economy was in a rough patch, recovering from the pandemic and facing the highest levels of inflation since the 1970s.

Incentives existed to increase immigration.

In higher education, UK universities dramatically expanded their sponsorship of student visas.

International demand for British universities is strong, making higher education one of the UK's largest exports.

But in 2021, British universities were under severe financial pressure due to cost inflation.

Cost inflation that they could not pass on to domestic students because there was a price cap on tuition fees set at £9,250 a year.