Bank of England governor Mark Carney has dismissed fears that cheap labour from immigrants has had a negative impact on UK productivity.
His comments follow yesterday’s publication of the quarterly inflation report, where the Bank of England downgraded the UK growth forecast to 2.5%, due in part to poor growth in productivity. This, he argued, was because a large proportion of the jobs created since the 2008 recession have been low paid and low productivity roles.
The report caused some concern that companies were failing to invest in productivity-boosting technologies because they had a large pool of available workers ready to take up the slack.
However, Carney explained to the BBC’s Today programme that older people willing to work and workers seeking longer hours had a ten times greater impact on the size of the worker pool than immigration.
He went on to say that as the number of jobseekers falls and the spare capacity in the workforce is used up, companies will turn towards increasing productivity, which will have a positive impact on the economy over the next few years.
He also argued that the size of the available pool of workers may not have been the main reason that companies have failed to invest in new technologies, and that uncertainty over the UK’s membership of the European Union may have also delayed investment.