Key myths on asylum, immigration and how to take on the far right

 

There are few subjects where the national debate is so contaminated by disinformation as immigration and asylum. Alan Beattie in the Financial Times described this as a millefeuille of falsehood. This list below is not comprehensive (for example it says nothing about one of our leading export industries, teaching students from overseas), but I’ve tried to focus on areas where the public are clearly and grossly misinformed. (More myths here)

Asylum and Refugees

Myth 1. “There is an ‘invasion’ of people arriving in small boats.”

Around 37,000 people arrived in small boats to claim asylum in 2024, which is just under 4% of the total number of immigrants that came to the UK in that year, That is 0.05% of the UK population. Yet from a YouGov poll only 20% of people correctly thought that there were many more immigrants staying legally than illegally, with almost half believing there were more illegal than legal migrants.

Myth 2. “The number of asylum seekers coming to the UK is out of control”

Someone who successfully claims asylum in the UK is at serious risk if they are returned to the country they came from. So the number of potential asylum seekers is completely out of the UK government’s control. All the UK government can do is either persuade asylum seekers to choose another country (see below), or if it was led by Nigel Farage send them back to their possible death. The UK’s actual record in the 1930s is far from good, but no doubt if Nigel Farage had been in power he would have eagerly sent every Jewish refugee fleeing from the Nazis back to Germany.

Myth 3. “Asylum seekers are particularly attracted to UK because we make it easy for them”

In 2023 the UK processed far less asylum claims than Germany, France or Spain. As a proportion of its population, it processes far fewer asylum claims than the Netherlands, Belgium, Denmark or Finland.

Myth 4. “But those coming on small boats are coming here illegally”

If this was the case, everyone arriving by small boat would be arrested and charged with some crime. They are not, because it is legal for anyone to apply for asylum in the UK. They come by small boat because they cannot get to the UK by any other means, and cannot claim asylum outside the UK.

Myth 5. “But most of those claiming asylum in the UK are economic migrants”

Typically many more asylum claims are successful than are refused.

Myth 6. “It costs the government a huge amount to deal with asylum seekers

In one poll, when asked what the three things the government spent most money on, dealing with asylum seekers and migrants appeared as number two in the list. The reality is completely different. The public vastly overestimates the costs of dealing with asylum seekers.

Myth 7. “Asylum seekers live a life of luxury in hotels”

They don’t. It is illegal for asylum seekers to work in the UK while their claims are processed. If their claim is successful, refugees have to find their own accommodation quickly, which can be difficult if they have no savings. There is no law or Government policy that puts refugees ahead of British Nationals in securing social or council housing because of their identity.

There is a reason why we should be concerned about the number of small boat crossings. It is that these journeys are dangerous to those who make them. The only realistic way to significantly reduce this number of crossings is to increase the number of safe routes for asylum applicants.

That these myths persist is partly because the coverage of this issue in the broadcast media is highly biased to the illiberal right, and highly dishonest. People have a right to claim asylum in the UK, and if the UK makes it impossible for most to claim asylum except if they are physically in the UK, then they will try to get here. By treating small boats as a problem caused by asylum seekers or criminal gangs rather than a consequence of the government's policy to deny safe routes (presumably so we don’t have to take our fair share of refugees), the media is dehumanising refugees.

Immigration

Myth 1. “Net migration is rising and is out of control.”

Net immigration fell from around 800,000 in 2023 to around 400,000 in 2024. Yet when people were asked about this, only 8% thought that migration had decreased.

Myth 2. “Immigration makes it more difficult to see a doctor, get places in schools etc”

Immigrants typically improve the public finances. Crucially, reductions in immigration are likely to be assessed by the OBR as worsening the public finances, so any government that cut back on immigration would have to raise taxes or cut spending on things like health or education.

Myth 3. “Immigration creates a housing shortage.”

Of course any increase in population potentially raises the demand for housing. That only becomes a problem if not enough new houses are built. England does have the second highest population density in the EU, but Wales, Scotland and Northern Ireland have far lower densities. The UK has a regional problem, rather than a population problem.

There is a trade-off between immigration and the retirement age. With an ageing population, the costs to the working population of providing pensions and the NHS is likely to become too great without immigration. If immigration was zero, one consequence would likely be a higher retirement age.

Myth 4. “Skilled immigration encourages firms to skimp on training”

There is little evidence of this. Firms that employ skilled migrants tend to do more training.

Myth 5. “Current immigration mostly involves unskilled workers”

The current UK immigration visa scheme is heavily orientated towards skilled workers

Myth 6. “Since we had high net immigration, the economy has tanked. That’s no coincidence.”

Except it is. Study after study tends to show that migration at worst leaves living standards unchanged, and may improve them. The US economy before Trump had high levels of immigration, and is one of the most successful economies in the world.

How to deal with a right wing focus on immigration and asylum

Myth 1. Get close to the right wing position

This idea comes straight from the simple political science spatial model of ‘triangulation’ or ‘accommodation’, and appears to be the approach the current UK government is following. But this model ignores voters’ perceptions of competence and trust. Quite simply, if two parties are similar but party A is in power and has failed to achieve voters’ objectives while party B has made this issue theirs, voters will tend to choose B. The simple spatial model also typically assumes that those voters that the triangulating party has moved away from will still vote for that party (as the lesser of two evils) rather than vote for another party or not vote at all.

Which is why empirical academic research, as well as experience in other countries suggests it is a bad idea for social democratic parties to try and ape the populist right. Current UK experience suggests exactly the same.(Paper here.)

Myth 2. Just get numbers down.

As I noted above, the government cannot control the numbers of people wanting to claim asylum in the UK, and since Brexit it has become more difficult to get other countries to take them instead. It is possible to limit immigration visas or overseas student numbers, but generally that involves a clear economic cost which will also influence government popularity, which is why successive governments haven't tried to do this. 

The pressure coming from the populist right, together with headline polls, may convince ministers that reducing immigration is worth almost any economic cost. But headline polls are highly misleading because they suggest numbers can be reduced costlessly. They are like polls about reducing taxation without mentioning public services. When voters are asked about whether immigration into particular jobs should be reduced, far more prefer current or higher levels of immigration.

In addition, if the disinformation evident in the current public debate tells us anything, it is that getting actual numbers down does not translate into a public perception that things are getting better. Whatever net migration numbers settle down to, the right wing chorus will be that this is too high, and the same is true for small boats.

The alternative to the two strategies above is to develop a distinctive position on both issues, that is not copying populists and which is not about getting numbers down. That distinctive position should be based on what voters say when they are asked questions beyond the simplistic up or down one. When asked, an overwhelming majority of people want to attract the best and the brightest people, even if that increases immigration. A majority also favours immigration if it improves the economy, or reduces skill shortages, or to staff the NHS. A distinctive position would centre on these trade-offs, to make clear that promises to reduce immigration made by other parties were either empty or would be highly damaging if implemented. 

A sensible immigration policy would focus on the causes of high immigration rather than simple numbers, and it would recognise that the UK has an moral obligation to take its fair share of refugees. One of the reasons the myths described above continue to be believed by so many people is that the facts are ignored by most politicians and most people in the media. Some have a motive to ignore reality, but others do not. 

The real fiscal concern should be a populist government

 

Scare stories about UK fiscal policy seem a regular occurrence nowadays. The latest is the idea that the UK might have to go to the IMF for money. It’s nonsense of course. The UK government cannot run out of money because it can create reserves, just as it did when the world’s bond markets dried up at the start of the pandemic. Current levels of debt to GDP rose a lot because of the Global Financial Crisis, austerity and the pandemic, but it is still below levels between 1917 and 1960.

But, as is often the case, there is a grain of truth in the recent concern. Inflation is coming down slower in the UK than in the US and Europe (although tariffs and deportations mean inflation is likely to rise again in the US.) That is one reason why interest rates on government debt remain pretty high in the UK.

While current (end August) rates on UK 10 year government bonds are 4.7%, for the US they are 4.2%, France 3.5% and Germany 2.7%.

This matters partly because it means the government has to pay these higher rates on the debt it issues, and higher debt interest payments mean either higher taxes or less money for public spending. (My own view is that it should be higher taxes, because most of those higher interest payments are going to UK individuals or institutions.) It also matters because other long term interest rates in the economy are influenced by bond rates, so higher bond rates mean higher mortgage rates, a higher cost of firm borrowing and so on.

The rates shown above are for 10 year government bonds. (If you buy them now, you get what you paid back in 10 year’s time.) One interesting feature of UK government debt at the moment is that interest rates rise the longer the maturity of the debt. The current interest rate on UK 30 year government debt is almost a full percentage point above the 10 year rate. Now that is not completely unexpected. Investors normally need something a bit extra to lock their money away for a long period, or risk having to sell in a volatile bond market.

However, the additional interest on a 30 year bond compared to a 10 or 3 year bond has been increasing recently. There are a number of possible reasons for this. One is global uncertainty, caused in particular by the antics of Donald Trump. In times of uncertainty people like to stay flexible, which in financial terms means staying liquid and avoiding long term commitments. The rise in 30 year bond rates relative to 10 (or less) year bond rates appears to be a global phenomenon.

Other specifically UK factors could involve supply and demand factors, plus some reason why arbitrage breaks down (such as the long time frame to make any profit.) One of these is the Bank of England selling off its stock of government debt built up under the Quantitative Easing programme. (Whether the Bank should be unwinding QE right now is another matter: see Carsten Jung of the IPPR here, for example.)

But there is yet another potential factor that should be raising bond rates in the UK beyond the short term, and that is the threat of a populist government. There are three reasons why the prospect of a populist government should lead to higher interest rates on longer term government debt. The first is central bank independence. Populists (by definition in the way I use the term) don’t like institutions that are independent from them yet that can take decisions that influence them. Populists also often (but not always) take stupid economic decisions, like cutting interest rates when inflation is likely to rise.

That matters a lot for anyone thinking about buying a government bond whose value is fixed in nominal terms (as most are). A period of inflation will reduce the real value of that bond, so anyone buying that bond will require a higher interest rate to compensate for that risk. Trump is a good example here. He has explicitly said that he thinks interest rates should be lower because the economy is booming (in his view), which is an idea that would help you fail a first year undergraduate economics exam. At the moment an independent central bank controls US interest rates, but Trump would like to replace the current decision makers with people who would do his bidding (effectively ending US central bank independence).

When Trump attempted to fire Lisa Cook, a central bank governor, under some fabricated pretext, this was seen as him stepping up his attempt to take control of the US central bank. The reaction of markets followed the analysis above. Rates on short term government debt fell, because Trump wants lower rates. However interest rates on longer term US government debt rose because of the prospects of higher inflation (coupled with the fact that someone at some point would raise interest rates to bring that inflation under control.)

The second reason bond markets should really worry about a populist government is default. A normal government in the UK or US would never choose to default, because the political costs of doing so far exceed the cost of servicing the debt. In addition, as noted above, a UK or US government cannot be forced to default. A populist government is, however, another matter. It is much more conceivable that a populist in power might choose to default on the government’s debt, although reducing real debt through higher inflation is still more probable. Even a very small chance of default would require significantly higher interest rates on government debt to compensate, as we saw in the Euro crisis.

The third reason why populist governments are likely to lead to higher interest rates on government debt is that they tend to make economic promises that can only be reconciled by higher budget deficits. Higher deficits will tend to raise interest rates not because they raise the chances of default (although see above) but because they add demand into the economy, which requires higher rates to offset its impact on inflation.

The example of Trump does raise an issue, however. Given his clear threats to central bank independence, the fact that he has flirted with the idea of partial default in the past, and that he has increased the deficit by giving tax breaks to the rich, why are interest rates on US government debt not even higher? One answer is to say the US is special, and there will always be an international demand for US government debt. Paul Krugman has a different answer, which is that markets typically discount the chances of a crisis until it is almost upon us.

In what is now the constant drip of scare stories about UK fiscal policy, there are two types. The first is pure wishful thinking by the (far) right. Here is Allister Heath of the Telegraph, thinking an impending debt crisis will force an early General Election. These are often the same people who thought Truss’s budget was wonderful.

The second and more interesting group involves more reputable and well intentioned economists, who sometimes raise legitimate issues. But there is always a danger for economists, which is that they focus on the economic details while ignoring the big political elephants in the room. If you are worried about levels of debt or debt interest in the UK and want to see debt to GDP falling, then focusing on fiscal rules or institutional fixes is not going to achieve very much as long as two big political hurdles remain in place.

The first elephant, as I have already mentioned, is the possibility, perhaps probability of a right wing populist government taking power in the next decade or so. Not only will this government probably ignore or cast aside any fiscal rules or institutions, they are also likely to greatly increase deficit finance simply for their own political gain. Under a right wing populist government, current worries about UK fiscal sustainability will look rather ridiculous.

The second, which is related to the first, is that in the UK any alternative to a populist government seems unable to raise taxes on income. Calling this cowardice by these governments misses the key point, which is that there is a general political belief that not pledging to keep current tax rates on income constant has a significant electoral cost. There are two possibilities. The first is that this belief is wrong. The second is that we have a political/media system that allows enough voters to believe that they can have both lower taxes and higher public spending. More needs to be done to show that if we want a level of public services similar to our Western European neighbours, we need to stop having a lower level of taxes than our Western European neighbours.

Reform and the UK press

It was entirely predictable that immigration/asylum would become the issue voters thought was the most important facing the country. Many people relate concern about immigration or asylum seekers directly to numbers, but that is only half true. Information about numbers is

mediated through the media, and in particular through the right wing press (which is most of the print media in the UK) [1]. Most of those expressing concern about immigration have no direct experience of the extent of immigration, and will certainly not be looking up the numbers themselves. As is well known, concern about immigration tends to be highest in areas where immigration is very low, and high national concern can coincide with people saying that immigration is not a big issue for their own area (see also here).

I first discussed this in a post in 2017, where I noted that the big increase in concern about immigration at the start of this century lagged increases in immigration numbers by a few years, but the lag between concern and the number of stories about immigration in the press was much shorter. Of course it greatly helps the right wing press to write those stories if they can refer to ‘record numbers’ and talk about ‘invasions’, so numbers clearly matter. But the right wing press is an important filter, as developments over the last decade clearly show.

The most obvious example is in the year before the Brexit referendum. Net migration to the UK was at a similar level to the previous five years, but public concern about immigration peaked in the year before the referendum because the right wing press was determined for Leave to win the referendum and knew negative stories about immigration and immigrants were a good way to achieve this. Once this goal had been achieved, there was less of a political need to write these stories and public concern steadily declined, even though net migration remained high right up until the pandemic. [2] As Roy Greenslade noted in January 2020,

“immigration has all but disappeared from newspaper pages. References to migrants, asylum seekers and refugees have almost vanished along with the associated prejudicial buzzwords and phrases, such as swamping, influx, surge, illegal, bogus, sham, jungle, welfare scroungers, benefit tourists.”

Net migration again hit record levels in 2021, but it wasn’t until 2024 that public concern about immigration came close to previous peaks. With a Conservative government in power and a general election forthcoming, right wing newspapers had their reasons for holding back. Concern might have been lower still if Sunak had not made the foolish decision to prioritise ‘stopping the boats’ through a crackpot scheme. But once we had a Labour government, there was no reason for the press to hold back.

If you think this exploration of the link between press coverage and public attitudes is not terribly rigorous, then there are academic studies that link public concern about immigration in many countries to media coverage (e.g. here and here). We also have studies that link how the media, and right wing press in particular, talk about immigration and asylum to public attitudes towards this issue (e.g. here and here). Images matter as well as words, and the right wing press choose their images as any good propagandist would.

Of course the massive increase in net immigration in 2022/3 was bound to increase public concern among those who worry about immigration levels. But numbers have been falling equally fast in 2024, yet public concern has continued to rise. This is partly because much of the public think ‘illegal’ migration exceeds legal migration, when in 2024 the former was just 5% of the latter. So the press and politicians can switch between the two issues depending on which can be made to sound more alarmist, and because few in or on the media counter this misinformation the public are inevitably misled.

The recent coverage of immigration and asylum in the right wing press has been almost apocalyptic. They have been hyping small demonstrations as if they were indicators of impending national unrest, and the broadcast media has largely followed their lead. The recent celebration by the Mail, Sun and Telegraph of someone who pleaded guilty to inciting racial hatred [3] makes “Hurrah for the Blackshirts” sound rather tame. We have reached the point where a majority of the print media are in effect encouraging civil unrest and racial hatred, yet thanks to political short termism this press remains essentially unaccountable for their behaviour.

This suggests two key conclusions. The first is that we currently don’t have much of a debate around immigration and asylum in the UK, as long as the Labour government continues to believe that parroting Farage and the Conservatives is the clever thing to do. For a debate you need two sides, and beyond the pages of the Guardian, FT and Mirror, where is the side to oppose Farage et al? [4]

This is an example of something I wrote about earlier. Social liberals, despite making up at least half the UK population, have little voice in politics and the media nowadays. They are the new silent majority. This alone is a good reason for a new party of the left, and a more active Green leadership, but neither will make much of an impact on a broadcast media that is used to balancing the government with the opposition, and which largely ignores other political parties unless they are ledby Farage. It will of course make no impact on the right wing press.

The second conclusion is that, on this issue as well as others like net zero, the right wing press may no longer be the “Tory party in the media” (to quote Tim Bale), but is instead Reform in the media. In perhaps the more important sense this has been true for some time, with in particular its support for Brexit. But as long as the Conservatives were the government or main opposition, it made sense for the right wing press to use Reform (and earlier UKIP) to help push its own agenda within the Conservative party, rather than pushing Reform as an alternative to the Tories. With Reform way ahead of the Conservatives in the polls, and with their policies on many (but not all) issues being identical, this is no longer the case.

In terms of its day to day coverage on key issues like immigration, asylum, climate change and Brexit, the right wing media is now acting as a propaganda outlet for Reform at least as much as the Conservatives. But, as previously with the Conservatives, it is often not clear whether the press are following the politicians lead, or whether the politicians are being led by the press. It may be at least as true to say that Farage and Jenrick are part of the political arm of the UK right wing press.

[1] Sales of newspapers may be falling, but their online influence remains large, and more than ever the right wing press sets the agenda for the BBC and others.

[2] Stories about how specific labour shortages, like lorry drivers, were causing economic damage also probably helped.

[3] She said “set fire to all the fucking [asylum] hotels full of the bastards”

[4] Zoe Gardner is great, of course, but I’m sure she would like some support from at least one of the three parties currently leading in the polls.

When did relative UK decline begin? Productivity and the Global Financial Crisis

When did things start going wrong in the UK? Many would give the Global Financial Crisis (GFC) as the answer. Now that may be a good answer for some reasons (see below), but I want to suggest one reason that is perhaps not so good as it first appears. That reason is labour productivity, growth and living standards.

Why does it appear to be the answer for UK productivity and growth? Here I can just refer to the chart that is at the top of my post two weeks ago, showing UK GDP per head before and after the GFC. As I have noted many times, underlying growth in UK GDP per head (and therefore to a first approximation real earnings) before the GFC is remarkably consistent, with a trend growth rate since the 1950s of just over 2%. There are of course booms and recessions around that trend, but until 2007 every economic downturn seemed to be followed by a recovery that put the level of GDP per head back on its trend line. Of course that constancy from the 1950s until the 2000s could well be a coincidence, with different factors influencing productivity more than others over particular parts of those fifty odd years.

Below is UK output per hour worked, which shows the same pattern (source)

After the recession of 2008/9 there was almost no recovery in the sense of output or productivity growing faster than trend. So the level of productivity and GDP per head did not return to its previous trend line. In addition, the growth rate also slowed substantially, to something like half the previous trend. It therefore looks like something disastrous happened around 2007, and the Global Financial Crisis is the obvious culprit.

Now we all know that the GFC started in the United States, and that the US financial system was also very badly hit by that crisis. Below is a picture of US productivity growth (output per hour in the non-farm economy).

It is a more complex picture than for the UK, but growth after 2007 does not look that different from growth since the 1970s, with the exception of a period of more rapid expansion from the mid-1990s to the mid 2000s. That period of more rapid growth is generally put down to the impact of the IT revolution. Here are some average annual growth rates:

Year on year productivity growth in the US (defn and source as previous chart)

Period	%
1948-73	2.8
1974-94	1.4
1995-2004	3.1
2005-19	1.5
2020-24	2.0

If we put the rapid growth around the millennium down to the IT revolution, then there is no downward shift in either the level or the growth rate of productivity as a result of the GFC.

Now it is of course possible that the GFC had a much more profound impact on UK growth than in the US. But there is an additional empirical reason to doubt that the GFC was the obvious reason why UK productivity growth declined so drastically. Below is a chart of productivity in the UK financial sector [1].

Financial services productivity started growing rapidly around 2004/5. We now know this was unsustainable, because it was based on levels of leverage that meant the sector could not survive significant negative shocks. If we take financial services out of the UK aggregate, then it becomes apparent that productivity growth in the rest of the economy began to slow from the post-war trend a few years before 2007. In addition the growth rate in the early 2010s is a bit better than the aggregate figures suggest.

It was for this reason that in this previous post I was careful to talk about a productivity slowdown, in the UK and elsewhere, that happened around 2005, rather than after the GFC. Why does a difference of a few years matter? As the reason for the decline in UK productivity relative to other advanced economies remains something of a puzzle, associating it with the GFC naturally focuses attention on financial factors to explain that puzzle. Placing the decline starting around 2005 allows for a wider range of possibilities.

In particular, it ties UK productivity trends more closely to those in the US. Perhaps UK productivity growth also benefited from the IT revolution around the millennium, and so at least part of the absolute decline in UK’s productivity growth since around 2005 is a result of that revolution petering out, just as we saw in the US. Doing this allows us to be far more eclectic about when underlying UK productivity started growing less than other major economies like the US. Excluding finance, UK productivity growth was quite strong after the recession, and it is only around 2013 that growth rates seem to clearly shift to below US levels. Of course none of this rules the GFC out as a key factor in explaining the UK productivity puzzle, but it does remove the GFC as the empirically compelling cause.

Are there other reasons besides growth for suggesting the GFC was the beginning of the UK’s recent relative decline? The obvious answer is that the deep recession it caused was key in ending the Labour government, and therefore starting a period of Conservative government that has been economically disastrous. However even this could be contested. Gordon Brown became pretty unpopular as Prime Minister well before the recession hit, and some would argue his standing as PM rose as a result of his handling of the GFC.

It is also crucial not to get the impact of the GFC crisis confused with the policy response to it, which was general fiscal consolidation, aka austerity. The long period of ultra low interest rates that began during the GFC but lasted for the next decade, and which helped create a boom in asset prices including house prices, was not a result of the GFC but was instead due to fiscal austerity. If the 2010 Coalition government, and governments around the world, had responded to the GFC recession by continuing rather than reversing fiscal expansion, as financial markets were crying out for them to do (because all interest rates were so low), then the period of ultra low rates would have ended in the early 2010s, and we would not have seen such a marked increase in asset prices.

[1] Levels extrapolated from growth rates, source.

Fascism, Rivers of Blood, and today’s political and media elite

Whether we call the Trump regime fascist or not is in one sense just semantics. Trump clearly has similarities to the archetypical fascist regimes of the 1930s, but there are also clear differences. In this post I defined, following Finchelstein, a fascist as a right wing populist that promoted violence for political ends and tried to subvert free elections. Trump qualifies as a fascist with his 2020 election result denial and the subsequent storming of the Capitol. The actions of the new Trump administration bring yet more parallels with 1930s fascism.

Of course others may have different definitions. Kay and Matlack say that an essential part of fascism is a strong state. The quote Mussolini: “Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato” (“Everything within the state, nothing outside the state, nothing against the state”). Trump and the Republican party, in contrast, are in many ways diminishing the state. Adam Tooze, for related reasons, calls the “Trump=fascism equation” absurd.

There is of course a great deal to debate here. Is ICE, soon to be the highest-funded law enforcement agency in the federal government, going to become a new arm of state terror or just a means of deporting non-white people? (It could, of course, become both.) Are tariffs just Trump’s idiosyncratic plaything or a new means for the state to control corporate America? But that debate is not the purpose of this post.

Instead I want to ask whether the validity of the Trump=fascism equation matters beyond academic discussion of appropriate definitions. I want to suggest one very political reason why it might matter.

As the years go by, the memory of what fascism in Germany in particular involved, as well as what it cost to ensure it did not come to dominate Europe, tends to fade. In particular, it tends to fade in the minds of the political and media elite. As an illustration of this, I want to recall the reaction of the political elite to the Rivers of Blood speech made by the then shadow cabinet member Enoch Powell in 1968.

In the speech Powell quotes a constituent as saying: "In this country in 15 or 20 years' time the black man will have the whip hand over the white man". Powell goes on to say: “Here is a decent, ordinary fellow Englishman, who in broad daylight in my own town says to me, his Member of Parliament, that the country will not be worth living in for his children….We must be mad, literally mad, as a nation to be permitting the annual inflow of some 50,000 dependents, who are for the most part the material of the future growth of the immigrant descended population. It is like watching a nation busily engaged in heaping up its own funeral pyre.” He advocated not just a halt to immigration but voluntary re-emigration to avoid the calamity he foresaw.

Powell’s speech was extremely popular among many, in part because they saw it as someone from the political elite at last recognising their own concerns. However key members of the then Shadow Cabinet threatened to resign if Powell remained in the Shadow Cabinet. Edward Heath dismissed Powell a day after the speech. The Times declared it "an evil speech", saying "This is the first time that a serious British politician has appealed to racial hatred in this direct way in our postwar history." The political elite of 1968 did not talk about the legitimate concerns of their constituents or readers, but condemned racism and the dehumanisation of immigrants in the clearest possible terms.

Compare and contrast with today. The Times, of course under different ownership from 1968, was happy to recently splash on the front page that “1 in 8 of all prisoners were born overseas”, neglecting to follow that up by noting a higher proportion of the total population was born overseas (1 in 6), meaning that those born overseas were less likely to be in prison than those born in the UK. This scare headline is part of what seems like an avalanche of attempts by the right wing press and right wing politicians to suggest that immigrants are much more likely to commit crimes (see also here, or here). It of course echoes Trump, who justifies the arbitrary deportation and sometimes brutal imprisonment of people of a certain ethnicity by describing those deported as hardened criminals.

The effect of all this is to stir up hatred against immigrants in general and particular groups of immigrants in particular. Demonstrations have been held outside hotels housing asylum seekers, with calls to ‘protect our kids’ and ‘get these scum off our streets’. These asylum seekers may well have been the victims of significant trauma in their countries of origin, as well as enduring a hazardous journey to the UK. They stay in hotels at taxpayer expense while their claims are assessed because the UK forbids them to work. Adding to that trauma by staging demonstrations of this kind is not an expression of legitimate concerns, but instead indicates that the UK is becoming a sick society.

A far right MP mistakes some rowers for a small boat carrying asylum seekers and helps organise a group of vigilantes on shore to await them. All this is encouraged by the language constantly and increasingly used in the right wing press and by mainstream politicians: talk of invasion, calling asylum seekers illegal and so on. Are those writing about the UK being at‘boiling point’ that different from Powell talking about rivers of blood? There are of course real issues around the level of overall immigration to the UK, but the demonisation of asylum seekers and small boats cannot be justified this way. Unfortunately spreading or encouraging disinformation about minority groups is as old as civilisation itself.

As the example of Powell shows, there have always been politicians and newspapers that have been able and willing to stir up racial or religious hatred. What has changed in the UK over the last fifty years is that the mainstream political and media elite seem unable to call out this behaviour for what it is. It was a Conservative party leader who did so in 1968, yet today even a Labour Prime Minister seems unable to resist joining in the dehumanisation of asylum seekers, treating them as a problem rather than deserving of our sympathy.

What has changed over the last fifty years to make dehumanisation and racism more acceptable among the political and media elite? It is not the case that the population as a whole have become more racist and intolerant, with a host of evidence suggesting the opposite has occurred. We are a less racist and more tolerant society today than we were in 1968.

The reasons why today’s elite seem unable to stand up to racism and dehumanisation in the way their predecessors did fifty years ago are no doubt complex [1], but one factor could be the distance in time from a war fought against a regime that turned racism into mass murder. Edward Heath and many in his cabinet will have served during WWII. They would have understood the common roots between racism against black people in 1968 and antisemitism in 1930s Germany. They may well have been aware of how many Jewish refugees from Germany were turned away by the UK government before WWII, and that many of those that were allowed in were then confined to internment camps when war broke out.

When I was younger I and others used to make fun of how obsessed people in the UK seemed to be about WWII. Now I think our political elite needs reminding of the characteristics of the regimes that war was fought against. This is why I think calling Trump a fascist isn’t just about semantics. Our elites need reminding about the values that their equivalents, like Edward Heath, helped create after WWII, and about the similarities between the regime currently running the United States and the regimes that war was fought against. Right now our political and media elites appear trapped in the headlights of growing racism and intolerance in the UK, fearful of a press and certain politicians that are doing their best to spread that racism and intolerance.

[1] The proximate causes are familiar. Farage is our own Donald Trump, whose popularity owes much to the desire of the right wing press to achieve Brexit and encourage right wing populism. The Conservative party has collectively decided that the threat of Farage is best met by copying him, so the idea that Badenoch could act towards Jenrick the way Heath did to Powell seems impossible. More extraordinary is that the Labour government is also under the misapprehension that the best way to combat Farage is to sound like him, a mistake that will seem incomprehensible in a few years time.

 

UK Growth, Productivity and Investment.

 

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Jagjit Chadha (ex head of NIESR and now a Professor at Cambridge) and Issam Samiri have an article in the Journal of Economic Surveys that focuses on the UK’s recent productivity problem. The chart above is taken from that article. Economic growth (or not), and therefore how fast living standards rise (or don’t) is all about productivity growth over the medium and long term. The UK’s problem is this. Productivity growth slowed in all the advanced economies from around 2005 onwards, but it declined by more in the UK, and that relative decline has continued until today.

There is not much the UK can do to buck international trends in productivity. There was no way UK GDP per head was going to continue to grow at pre-2005 rates, so the chart above greatly exaggerates the problem. The survey discusses potential reasons why global productivity growth started slowing around 2005. One story is that the earlier boost to productivity provided by IT in the 1990s started to fizzle out, but to be honest we have more stories than clear answers on this. However, between around 1980 and 2005 the UK kept pace with the US, Germany and France on productivity growth, so there was no UK productivity problem over that period. Those who say the UK has always been in relative decline are just factually wrong.

So what caused the relative UK decline in productivity from around 2005 onwards? The paper goes through various different studies and explanations, and I cannot repeat them all here. How much is due to the importance of banking to the UK economy, so the Global Financial Crisis had an outsize impact on UK productivity growth? Did slower global growth have more of an impact on the UK than elsewhere? Coyle and Mei in a 2023 paper in Economica found that the UK productivity slowdown was largely driven by the manufacturing and information and communication sectors.

Below, in another chart taken from the paper, is the UK’s investment to GDP share relative to other major economies. Investment doesn’t just provide capital that helps produce output, but it is often how technical advances are embodied in production. [1]

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In the 1960s UK investment was substantially lower than in the US, Germany or France, but by the 1970s the UK was at least within touching distance of these other countries. It may reasonably take some time for higher investment rates to show up as higher productivity growth, so perhaps the UK’s relatively good productivity performance from around 1980 was the delayed response to this higher level of investment. Equally, perhaps the decline in relative productivity from around 2005 was due to the decline in the UK investment share compared to these other countries from around 1995.

One idea I looked at in a previous post was that austerity, by delaying the UK’s economic recovery from the Global Financial Crisis, may have had a permanent negative impact on productivity through lower investment. I concluded that austerity, in creating an unusually protracted recovery in aggregate demand from the GFC recession, did have some negative impact on productivity growth and therefore a persistent negative impact on output supply, but how large that effect may have been is very difficult to quantify.

As the chart at the top of the page shows, we actually have two UK productivity/growth problems: the one discussed above, and another that is more recent. In the UK the pandemic appears to have been assciated with a fall in productivity, and perhaps a subsequent growth rate that is even slower than since the mid 2010s. Luckily that is easier to explain, as we can see from the chart above. Whereas the investment share in Germany, France and the US went on increasing through the 2010s, the UK share started declining around 2016. The reason is of course Brexit, and lower investment isn’t the only reason that Brexit would lead to lower productivity growth.

While Brexit was clearly an act of national self harm in terms of productivity growth and therefore UK living standards, the reasons for the UK’s relative decline in productivity growth from the mid-2000s remains something of a mystery, with many potential stories with little consensus about which if any are the more important. My own instinct is that the UK’s low levels of investment compared to other countries since the mid-1990s has to be a key part of any explanation of relatively low productivity growth, but the reasons for these low levels of investment in the UK also remain largely unexplained.

[1] The structural econometric macromodel I and others created in the 1990s had a vintage production function, where technical progress is embodied in new investment.