Jonathan Portes's picture
Affiliation: 
National Institute of Economic and Social Research
Credentials: 
Director

Voting history

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Disagree
Confidence level:
Very confident
Comment:
Taking the categories in the question in turn. 1) On students, policy changes have resulted in significant reductions in international students in the FE sector; while there was undoubtedly some abuse, this also translates into lower exports. In HE, universities have largely adapted to the new system for undergraduates, but the abolition of the Post-Study Work Route means the UK is deliberately excluding a significant group of potential highly skilled and well integrated immigrants with good labour market prospects; this is entirely irrational from both an economic and social perspective. 2) On skilled workers, the system is now considerably more bureaucratic, although the expansion of the ICT route and the avoidance of a binding numerical constraint has mitigated the direct economic consequences so far. 3) On family migration, new income rules have probably increased the average income/skill level of family migrants, although obviously some UK citizens have suffered serious personal consequences. More broadly, of course, the obvious contradiction between the government's "open for business" rhetoric and its rhetoric and policy on non-EU migration has clearly not helped efforts to deepen economic links with some non-EU countries (India, in particular) although it is not possible to quantify any such impacts.

Question 1: Do you agree that migration to the UK can be expected to be beneficial for the average income of current UK inhabitants in the upcoming decade?

Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
Immigrants to the UK, both from within and outside the EU, are more likely to be of working age than current UK inhabitants and are more likely to have higher skills and qualifications. As a result, spillover effects and complementarities mean that immigration is likely to result in higher productivity for both new and existing workers and hence higher incomes. [See Rienzo (2013) http://niesr.ac.uk/publications/migration-and-productivity-employers%E2%80%99-practices-public-attitudes-and-statistical ]. In addition, since recent immigrants have a more positive fiscal balance than natives, migration will have a positive impact on native welfare (natives will see lower taxes or higher public service spending for a given deficit/GDP path).

UK House Prices and Macro-Prudential Policy July 2014

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Question 2: When housing-related risk is deemed excessive from the viewpoint of financial stability, do you agree that the correct response is to deploy macro-prudential tools, leaving interest rates focused on the needs of inflation and aggregate real activity?

 
Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
Macroprudential tools are largely untested in the UK. However, it is clear interest rates alone are far from an ideal instrument to deal with housing-related risk; and there are good reasons on empirical and theoretical grounds to prefer macroprudential instruments.

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Question 1: Do you agree it is time for more robust policy action to prevent a build-up of excessive housing-related risk?

 

 
Answer:
Agree
Confidence level:
Not confident
Comment:
The UK housing market is clearly a source of structural problems in the UK economy: now is no exception. However, it is very difficult to assess at any one time whether it is genuinely a macroeconomic problem, and if so what to do about it.

Economic Consequences of an Independent Scotland June 2014

Question 2

Assuming that Scotland becomes an independent country, do you agree that the UK government's position of ruling out a monetary union is in the economic interests of the continuing UK? 

Answer:
Agree
Confidence level:
Very confident
Comment:
Ruling out a monetary union would probably have some costs in terms of trade and reduced economic integration with Scotland. However, the downside risks of a poorly structured or managed monetary union are sufficiently great to justify incurring these relatively small (for the continuing UK) upfront costs.

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