UK GDP could be boosted by £12-40 billion from migration of skilled Hong Kongers

July 6, 2020

The Foreign Secretary has developed proposals for a bespoke immigration route for the 2.8 million Hong Kong people who currently have the status of being British Nationals (Overseas) and their dependants. They will be granted five years leave to remain in the UK, with the right to work or study; after these five years, they will be able to apply for settled status; and after a further 12 months with settled status, they will be able to apply for citizenship

 

The potential influx of workers from Hong Kong could provide a significant stimulus to the UK economybut how much? Our conservative first estimate of their contribution to GDP is based on working out how many people might migrate and converting that to potential economic output through the additional labour force. Obviously not all the 2.8 million eligible individuals will migrate to the UK and of those who do so, they are unlikely to do so all at the same time. We have looked at some numbers to try and estimate how many might come. Those directly eligible will have to have been resident prior to 1997, so they will all be at least of working age, though dependants need not be.

 

One group that might be likely to migrate are those who have maintained their BN(O) passport and thus have maintained an ongoing link to the UK. This comes to 350,000 people. Another group might be those who have been protesting. Almost 800,000 individuals took part in the protests out of a population of 7.5 million, more than 10% of the population. Our cautious assumption of the number of potential migrants is 300,000. Our less cautious assumption is 1 million.

 

Using a field study of the protestors in Hong Kong, 60% of individuals are under 30, while 22% are 30-45. [1]. Given the majority are middle-aged or young, their productivity currently could be just below the general Hong Kong average [2]. Translating this into sterling, it suggests that potential workers from Hong Kong had an average economic productivity of £69,900 in 2019, though their productivity in the UK might end up being somewhat different because of factors such as infrastructure, general working methods, culture and proficiency in the local language.

 

As a baseline though, should 300,000 people migrate to the UK, the UK’s economy could benefit from a £12 billion stimulus. This is unlikely to be the full extent to the impact; those eligible to move to the UK may have dependants who will eventually add to the UK economy once through schooling. Additionally, a  greater proportion of eligible individuals may immigrate over a longer period – on top of the impact of having a relatively young population of immigrants with rapidly improving skills during their working lives. If 1 million individuals immigrate over a five year period, the UK could benefit from their productivity leading to an eventual economic stimulus of £40 billion.

 

This static estimate of the impact on the UK seems likely to understate the full impact. In his book ‘The Flat White Economy’ describing the digital and tech jobs that many of the new migrants are likely to take up, Cebr founder Douglas McWilliams has argued that the impact of migration on growth is more than proportionate because migrants are outside their comfort zone and likely to be even more productive than hitherto. He also argues that immigration boosts the productivity of the domestic labour force by showing them different ways of doing things and by stimulating their creativity. Another factor contributing to the full impact will be the potential move of Hong Kong assets into the UK, which might be made easier and more convenient by the settlement offer.

 

So, the longer-term boost to GDP from Hong Kong migration may be considerably more than estimated above. With the economic problems caused by Coronavirus and the possible short term impact of a No Deal Brexit, the influx of highly skilled migrants from Hong Kong could be a ray of sunshine in what is otherwise a dismal year for the UK economy.

 

 

References:

[1] South China Morning Post. (2020). ‘Young, educated and middle class: first field study of Hong Kong protesters reveals demographic trend’.

[2] Census and Statistics Department of Hong Kong. (2020). ‘Wages and Labour Earnings’.

 

For more information, please contact:

 

Cristian Niculescu-Marcu cniculescu-marcu@cebr.com (+44 7748 161 755)

Daryn Park dpark@cebr.com