On Thursday the Office of Budget Responsibility will release their latest Fiscal Sustainability report.
The Migration Advisory Committee have looked at the OBR’s 2013 Fiscal Sustainability Report and their finding that higher net migration would lead to a reduction in debt as a percentage of GDP over a 50 year time frame. The OBR had concluded that “immigration has a positive effect on the public sector’s debt dynamics”. This was based on the assumption that migrants had the same skills profile as natives and on the fact that they were more likely to be of working age.
However, as the MAC noted, “the full effects of migrants retiring are not fully captured in the model”. They state in paragraph 8.63 of their report
“Therefore higher migration may well help reduce public sector net debt. However this is probably a temporary effect and the gains would need to be weighed against other costs and benefits arising from the increased migration.”
This is consistent with our own assessment of the OBR set out in our blog on in August last year
It will be interesting to see how the issue is covered in the OBR report on Thursday.