Jonathan Portes On Brexit, Refugees, & UK Immigration Policy

Pre-Brexit E.U. Immigration To The U.K.

Aiden Singh: For the founders of the European Union (E.U.), what were the motives behind enabling the free movement of people? Were they primarily economic or political?

Jonathan Portes: The motives were primarily political at the outset. 

The free movement of workers was one of the four fundamental freedoms enshrined in the Treaty of Rome: the freedom of movement of goods, services, capital, and labor. 

It is fair to say that, initially, free movement of workers was probably the least economically significant of these freedoms. Both in reality and as perceived by the original founders, it was regarded more as an aspirational principle; it was something that sounded commendable within the treaty.

There was some labor mobility within the founding six countries during the first decade, but it was not the primary driver of economic integration. At the time, it did not provoke significant political controversy. Moreover, the concept of free movement of workers did not necessarily remove substantial barriers to labor mobility. For example, individuals did not automatically have the right to transfer their social security contributions or to bring dependents with them, nor did they necessarily have unlimited rights to relocate. 

In practice, therefore, moving between member states was not as straightforward as the term “free movement” might suggest.

Aiden Singh: How did the European Union’s policy of free movement alter the demographics of the United Kingdom up until Brexit?

Jonathan Portes: The most significant legal and theoretical advance in free movement occurred after 1992, with the introduction of the euro. Although the United Kingdom did not adopt the euro, free movement was regarded as a necessary complement to a single currency, similar to the relationship observed within the United States, for both economic and political reasons.

The European Union implemented various measures to facilitate labor mobility, including provisions that made it easier to transfer pension or social security contributions between member states. 

However, the most substantial practical change in the movement of labor occurred in 2004, when countries from Eastern and Central Europe joined the European Union.

Because income disparities between these new member states and the existing EU countries were significantly larger than disparities within the original EU, considerable labor mobility was anticipated. This expectation generated political concern and controversy. Consequently, the treaties allowing accession included transitional provisions, permitting member states to temporarily limit free movement for up to seven years.

The United Kingdom, however, chose not to implement these transitional restrictions, unlike nearly all other EU member states. This decision was influenced by the United Kingdom’s role as a key supporter of these countries’ accession and its interest in maintaining strong diplomatic and economic relations with them. Additionally, the United Kingdom’s labor market was performing well and there was demand for workers.

As a result, a substantial portion of the initial migration flow came from the accession of eight countries, namely Poland, Hungary, the Czech Republic, Slovakia, and the Baltic states, to the United Kingdom. Tens of thousands, hundreds of thousands, and ultimately millions of people relocated. Following the accession of Romania and Bulgaria in 2007, which granted full free movement in 2014, there was an additional large influx of migrants from these countries to the United Kingdom.

By the time of Brexit, it was estimated that there were approximately three million citizens of other EU countries residing in the United Kingdom, representing roughly four to five percent of the population. In reality, the number was likely higher, possibly exceeding four million, as statistical data did not fully capture the extent of migration.

Aiden Singh: Does research indicate any negative or positive effects on employment or earnings for British nationals as a result of the immigration from the European Union?

Jonathan Portes: Somewhat surprisingly, although there was considerable concern initially regarding the potential negative impact of a substantial influx of migrants—several hundred thousand people entering the United Kingdom in a relatively short period—research provides no evidence of a significant overall negative effect on employment.

Contrary to early fears, the new migrants did not displace existing workers; rather, they contributed to an increase in the total number of jobs in the economy. 

There were likely some localized wage effects in specific sectors and regions, particularly in lower-paid occupations, where wages experienced minor downward pressure. But even in these cases, the wage effects were relatively small. 

Overall, the evidence suggests that there was no significant negative impact on wages or employment. There was a redistributive effect, as is typical with economic shocks such as free trade agreements, but the overall effect was not negative and may have been positive for the United Kingdom economy.

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The Effect of Brexit on Migration To The U.K.

Aiden Singh: How have immigration flows evolved following Brexit?

Jonathan Portes: Immediately following the referendum, although the laws themselves did not change until 2021, there was a clear reversal in the trend of European Union migration. EU migration initially slowed sharply and subsequently became negative during and after the pandemic. 

At its peak, net migration of EU citizens to the United Kingdom reached approximately 300,000 in 2016, coinciding with the referendum. After the pandemic, net EU migration became slightly negative, reflecting a significant reversal in trend.

This outcome was broadly expected by analysts, including myself. We predicted that the psychological impact of the referendum, combined with broader economic trends in both the United Kingdom and the European Union, and the consequences of Brexit itself, would lead to a sharp decline in EU migration to the United Kingdom. We also anticipated that this reduction would be partially offset by an increase in migration from non-EU countries. This increase was expected to arise in part from replacement migration to meet labor demand previously supplied by European workers, and in part from the government liberalizing immigration rules for non-European nationals to mitigate potential economic impacts from the end of free movement.

What was not anticipated, however, was that these two factors combined to more than offset the decline in EU migration. From the end of the pandemic to approximately mid-2024, migration from outside the European Union increased substantially.

This phenomenon was not unique to the United Kingdom; similar trends were observed in countries such as the United States, Canada, and Germany. 

Nevertheless, the United Kingdom experienced the largest increase, driven primarily by labor market demand that could not be met by European migrants, especially in the post-pandemic period marked by widespread labor shortages, coupled with the government’s decision in 2021 to liberalize the immigration system for non-European migrants.

Consequently, the net effect of Brexit, at least through the end of 2024, was to increase overall migration to the United Kingdom, rather than reduce it as many had expected.

Aiden Singh: Have the economic impacts of the post-Brexit immigration system been positive or negative?

Jonathan Portes: The evidence appears to be largely positive, as post-2021 migration was strongly driven by labor demand. 

Employment rates among the new migrants have been relatively high. 

Although many migrants entered relatively low-wage sectors, such as the care sector, their wages have generally performed reasonably well.

On average, wages for non-European Union migrants are slightly higher than those for United Kingdom nationals. Therefore, while there has been a considerable influx of lower-paid workers, the migration wave has also included a substantial proportion of medium- to higher-skilled migrants.

Overall, post-Brexit migration has been beneficial for tax revenues and, more broadly, for the functioning of the economy, although it has generated some degree of political backlash.

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A Case Study On Refugee Outcomes In The UK

Aiden Singh: Related to the politically-charged issue of immigration is willingness to accept refugees and concerns about whether they may become an economic burden. You’ve looked into the long-term outcomes for East African-Asian refugees in the U.K. What did you find?

Jonathan Portes: The East African-Asian episode occurred in the late 1960s and early 1970s. During this period, a large group of Asians, primarily of Indian origin, who had been residents of British colonies in East Africa—specifically Kenya, Uganda, and Tanzania—migrated to the United Kingdom. 

Many had been brought to East Africa under the British Empire to provide labor, ranging from unskilled work to middle-class roles serving colonial administration and commerce.

Following independence, these communities faced severe discrimination and mistreatment from the newly established regimes. In Uganda, for example, under the rule of Idi Amin, many were violently dispossessed or killed. Similar, though less extreme, discrimination occurred in Kenya and Tanzania. As a result, a substantial proportion of this population left East Africa and sought refuge in the United Kingdom.

Their arrival was highly controversial at the time. Enoch Powell famously argued that they had no right to come to the United Kingdom and should be denied entry. Ultimately, however, both Conservative and Labour governments allowed the majority to settle in the United Kingdom, despite public opposition.

Roughly a half-century on, research on this group indicates that their long-term outcomes have been highly positive. They generally achieved significant success in employment, and their children performed well educationally. This group is often cited as a successful example of migration. Notably, these individuals were not selected for economic criteria; many arrived with limited financial resources and often had lost businesses or assets in East Africa. Nonetheless, they integrated successfully into the United Kingdom economy and society more broadly.

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Child Benefit Reforms and Fertility Rates

Aiden Singh: In addition to immigration, another variable that shapes demographic developments is, of course, fertility rates. You’ve conducted research into whether cutting child benefits reduces. What did you find?

Jonathan Portes: In 2015, the Conservative government determined that families with multiple children were receiving excessive benefits, particularly among those who were unemployed or had low incomes. At the time, the United Kingdom operated a top-up system for low-income working families.

The government introduced a policy that effectively limited support for children beyond the second child. Under this policy, families with a third child no longer received an increase in child tax credits, as it was then called. This measure was highly controversial, as it was predicted to increase child poverty among the affected population, which was primarily composed of relatively low-income families with several children.

The government justified the policy on the grounds that individuals should not have children if they cannot afford them. Implicit in this rationale was the assumption that financial incentives significantly influenced fertility decisions. Critics, particularly in the popular press, framed this argument more pejoratively, suggesting that some families were motivated to have additional children in order to maximize welfare benefits.

Our research sought to determine whether the reduction in financial support actually influenced fertility behavior. The policy created a clear cutoff: children born before April 1, 2017, were eligible for benefits, while those born after that date were not. This demarcation allowed for precise econometric analysis, as it affected only a subset of families, thereby isolating the impact of the policy from broader social, economic, and cultural trends influencing fertility.

Surprisingly, the analysis indicated no measurable change in fertility among the affected families. Financial incentives alone did not appear to drive childbearing decisions. Rather, fertility behavior is shaped by much broader social, economic, and cultural forces.

Indeed, contemporary demographic concerns in the United Kingdom, as in other advanced economies, focus less on excessively high fertility and more on the challenges associated with declining fertility rates. 

The findings suggest, in line with other research, that financial incentives alone are insufficient to alter fertility behavior; any policy approach must consider the broader social and economic context.

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Editing by Harpreet Chohan.