East European Immigrants Boost UK's Tax Take

by Amanda Banks, Tax-News.com, London

02 May 2006

A recent study by Ernst and Young's Item Club says that immigration into the UK from new EU Member States will boost the Treasury's tax take by up to GBP1.3 bn by the 2007-08 tax year.

It is thought that about 300,000 workers from Eastern European countries have taken up jobs in the UK, adding GBP2 bn to GDP in the current fiscal year. That figure is expected to rise to GBP4 bn in 2007-08, and GBP6 bn in 2008-09.

Professor Peter Spencer, the chief economic advisor to the Item Club, said: "The steady flow from the most recent accession countries to the UK has proved remarkably positive for the economy… we are looking at a very positive cost-benefit ratio."

The Home Office says that between June 2004 and December 2005, 48,000 Eastern Europeans registered for work in London, compared with 51,000 in Anglia and 40,000 in the Midlands.

Although increased competition for jobs has limited wage rises in some sectors, perhaps to the disbenefit of existing workers, almost all the other effects of immigration are positive, says the report: "They have rejuvenated our workforce and made it much more mobile." Agriculture, manufacturing, services and construction are the main sectors in which immigrants take up jobs.

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