• Following growth of 3.1 per cent in 2013, the world economy will grow by 3.5 per cent in 2014 and 3.7 per cent in 2015.

• The pace of recovery remains slow and uneven; much of the Euro Area in particular remains very depressed.

• Key risks include deflationary pressures in the Euro area; the Chinese financial system; and the conflicting pressures on monetary policy from very buoyant financial markets and relatively weak real activity.

• After growing by 3 per cent in 2014 the economy will grow by 2.3 per cent in 2015.

• Unemployment will drop below 6 per cent later this year.

• CPI inflation will be close to target this year and next; we expect interest rates to begin to rise gradually early next year.

The production of this forecast is supported by the Institute's Corporate Members: Bank of England, HM Treasury, Mizuho Research Institute Ltd, Santander (UK) plc and by the members of the NiGEM users group.

In this paper we review the policies put in place by the main Western destination countries to attract highly skilled migrants. Two main systems can be identified. On the one hand, employer-driven schemes typically call for the migrant to meet a set of minimum skill requirements and to have a job offer before a work visa can be issued. On the other, migrant-driven schemes typically do not require a job offer, and instead select the migrant based on a set of characteristics chosen by the policymaker. Employer-driven schemes are the dominant policy tool in the sample of countries we consider in the analysis, and only Australia, Canada and New Zealand have made migrant-driven schemes the mainstay of their skill selective immigration policy. The preliminary evidence we review suggests that the latter are more effective in increasing the skill level of the immigrant population, and casts doubts on the usefulness of new initiatives like the EU blue card that are still based on an employer-driven system.

This paper uses an OLG-CGE model for the UK to illustrate the long-term effect of migration on the economy. We use the current Conservative Party migration target to reduce net migration “from hundreds of thousands to tens of thousands” as an illustration. Achieving this target would require reducing recent net migration numbers by a factor of about 2. We undertake a simulation exercise to compare a baseline scenario, which incorporates the principal 2010-based ONS population projections, with a lower migration scenario, which assumes that net migration is reduced by around 50 per cent. The results show that such a significant reduction in net migration has strong negative effects on the economy. By 2060 the levels of both GDP and GDP per person fall by 11.0 per cent and 2.7 per cent respectively. Moreover, this policy has a significant impact on public finances. To keep the government budget balanced, the effective labour income tax rate has to be increased by 2.2 percentage points in the lower migration scenario.

Research on anti-immigrant attitudes in the United Kingdom in the past has focused primarily on feelings of prejudice driven by local concentrations of ethnic minorities. The immigration debate, however, has arguably changed since the EU expansions and the economic crisis of the past decade. This paper tests whether public support for immigration restriction is empirically driven by factors such as resource scarcity and economic stagnation, skill supply of native and immigrant workers, and the origin of immigrants from poorer countries within and outside the EU. Survey data from the European Social Survey between 2002 and 2010 are matched with regional level indicators calculated using the UK Labour Force Surveys. Findings suggest that support for immigration restriction is higher in regions where more immigrants are unemployed, but lower in regions where more natives are unemployed for longer than a year. Both the origin and ethnicity of the immigrant population appear to play a role in immigration policy preferences among native respondents.

Examining data for 79 immigrant source countries and six OECD member destination countries during the years 1975–2000, we find that source-destination cultural differences inhibit international migration. We also report that existing immigrant stocks act to offset, at least in part, the migration-inhibiting effects of cultural differences. Employing educational attainment as a proxy for skill, we find variation across low-, medium-, and high-skilled immigrant cohorts both with respect to the cultural distance-migration relationship and in terms of the extent to which existing immigrant stocks offset the influence of cultural differences. Our results appear robust to econometric techniques, sample composition, and endogeneity issues.