Karl Williams has a useful CAPX piece on net immigration assumptions behind Jeremy Hunt’s Budget.
Political gremlins lurk in the OBR’s immigration numbers
Most macroeconomic forecasts contain a few gremlins – questionable assumptions or inconvenient details – that help nudge the underlying model towards the results its authors or patrons want to see. The ‘Economic and Fiscal Outlook’ (EFO), published on Budget days by the OBR, is no exception...
So what of Jeremy Hunt’s Budget on Wednesday? Well, in this case, the insidious figure lurking within the accompanying data was not exactly difficult to find, for it was the same as in the November 2022 Budget, only bigger – 19.5% bigger, to be precise.
Lots of factors go into GDP growth. One is the size of the labour force. Hunt’s welcome push on economic inactivity was partly a reflection of this. But most of the workforce growth comes from additional net migration, with the long-run annual rate revised up by 40,000 to 245,000.
So what of Jeremy Hunt’s Budget on Wednesday? Well, in this case, the insidious figure lurking within the accompanying data was not exactly difficult to find, for it was the same as in the November 2022 Budget, only bigger – 19.5% bigger, to be precise.
Lots of factors go into GDP growth. One is the size of the labour force. Hunt’s welcome push on economic inactivity was partly a reflection of this. But most of the workforce growth comes from additional net migration, with the long-run annual rate revised up by 40,000 to 245,000.
That's more than an extra Milton Keynes every year, or maybe another Blackpool each year. The whole piece is well worth reading.
4 comments:
Oh no! Not more Milton Keynessisis/Kenynei.
Budget? That something to do with the Oscars? I missed both, plus Eurovision.
GDP is a complete con.
Did GDP drop when we were in complete lockdown? And all the important people were at home?
Does GDP reflect the fact that we no longer make anything? Or export the stuff we no longer make?
If I lend you money that increases the GDP.
When you pay me back that increase GDP.
When the gubment pay a useless NGO to tell us what we are doing wrong that increases GDP.
These are several reasons why Russia has such a small GDP.
And therefore why they, with their tiny GDP, should be a walk over for us in the West with our wonderful GDP.
DJ - or maybe Miltons Keynes.
James - it's similar, we pay and they perform.
Doonhamer - I agree it is a con. If it can be used to justify ludicrous levels of immigration then it isn't much use.
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