The UK won't become Europe's biggest economy if we slash immigration

The Tories are hailing the UK's projected growth while promoting policies that would strangle it.

Tory MPs are busy hailing what they regard as a late Christmas present: the news that the UK is forecast to become Europe's largest economy by 2030. According to the Centre for Economic and Business Research (CEBR), Britain will overtake France by 2018 and Germany within the next two decades, leaving it as the second biggest western economy after the US.

The response from the Conservatives could be summarised as "See? We told you George knows what he's doing!" But here's one point they're conveniently avoiding: Britain won't win the growth race unless it maintains a high rate of immigration. As the CEBR states, "positive demographics with continuing immigration" is the main factor (along with non-membership of the euro) behind the UK's projected success. While Germany's population is forecast to decline sharply over the next few decades, the UK's is expected to rise to 75 million by 2043, making it the biggest country in Europe.

That a significant part of this increase is expected to come through immigration helps explain why Britain will grow strongly. An OECD report last month, for instance, found that migrants make a net contribution of 1.02 per cent of GDP or £16.3bn, since they are younger and more economically active than the population in general. Far from being "benefit tourists", migrants contribute far more in taxes than they receive in welfare payments and public services. Of the 5.5 million people claiming working age benefits in February 2011, just 371,000 (6.4 per cent) were foreign nationals when they first arrived in the UK, meaning only 6.6 per cent of those born abroad receive benefits, compared to 16.6 per cent of UK nationals.

Were immigration to be cut to the level most Tories would like to see (little or none), growth would be dramatically reduced. According to NIESR, a halving of net migration over the period to 2060 would shrink GDP by 11 per cent and GDP per person by 2.7 per cent. This leaves the Tories with two options: they can either welcome immigrants as contributors to the economy, or they can turn them away and accept growth will suffer as a result. What they can't do (at least if they wish to retain any credibility), is to boast of our projected growth while promoting policies that would strangle it.

David Cameron talks to UK Border Agency officials in their control room during a visit to Heathrow Terminal 5. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Tom Watson rouses Labour's conference as he comes out fighting

The party's deputy leader exhilarated delegates with his paean to the Blair and Brown years. 

Tom Watson is down but not out. After Jeremy Corbyn's second landslide victory, and weeks of threats against his position, Labour's deputy leader could have played it safe. Instead, he came out fighting. 

With Corbyn seated directly behind him, he declared: "I don't know why we've been focusing on what was wrong with the Blair and Brown governments for the last six years. But trashing our record is not the way to enhance our brand. We won't win elections like that! And we need to win elections!" As Watson won a standing ovation from the hall and the platform, the Labour leader remained motionless. When a heckler interjected, Watson riposted: "Jeremy, I don't think she got the unity memo." Labour delegates, many of whom hail from the pre-Corbyn era, lapped it up.

Though he warned against another challenge to the leader ("we can't afford to keep doing this"), he offered a starkly different account of the party's past and its future. He reaffirmed Labour's commitment to Nato ("a socialist construct"), with Corbyn left isolated as the platform applauded. The only reference to the leader came when Watson recalled his recent PMQs victory over grammar schools. There were dissenting voices (Watson was heckled as he praised Sadiq Khan for winning an election: "Just like Jeremy Corbyn!"). But one would never have guessed that this was the party which had just re-elected Corbyn. 

There was much more to Watson's speech than this: a fine comic riff on "Saturday's result" (Ed Balls on Strictly), a spirited attack on Theresa May's "ducking and diving; humming and hahing" and a cerebral account of the automation revolution. But it was his paean to Labour history that roused the conference as no other speaker has. 

The party's deputy channelled the spirit of both Hugh Gaitskell ("fight, and fight, and fight again to save the party we love") and his mentor Gordon Brown (emulating his trademark rollcall of New Labour achivements). With his voice cracking, Watson recalled when "from the sunny uplands of increasing prosperity social democratic government started to feel normal to the people of Britain". For Labour, a party that has never been further from power in recent decades, that truly was another age. But for a brief moment, Watson's tubthumper allowed Corbyn's vanquished opponents to relive it. 

George Eaton is political editor of the New Statesman.