The Office for Budget Responsibility’s report today had another stark message for Prime Minister David Cameron: his attempts to restrict immigration into the UK would have a huge impact on our economic growth.

It points out that immigration policy will also lead to a long-term decline in the UK’s economic potential.

This key paragraph in the report states:

Our estimate is that trend output will grow at 2.35 per cent over the next three years, slowing to 2.1 per cent from 2014 on as demographic changes reduce the growth of the potential labour supply.

The FT’s Alex Barker says this indicates Cameron’s immigration policy ‘will fail’. He also thinks Cameron will simply fail in restriction immigration anyway.

The implication is to maintain a 2.75 per cent long term growth, either the British birth rate needs to rise significantly (it’s predicted to fall) or immigration levels need to run at the same pace as when Britain opened its doors to Poland.

It’s an economic challenge that runs against the grain of the political debate these days. Most folk in Westminster are only happy to talk about restricting the borders, rather attracting more foreign workers.

The OBR report states that even though immigration won’t fall as much as Cameron wants, it will still impact the UK’s growth prospects.

“Makes you wonder what the additional hit to trend growth would be if Cameron did manage to bring net migration down to under 100,000,” Alex Barker asks.

And that is before news that business confidence was down because the Treasury keeps playing down the economy.

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