The economic impact of international students in the UK

by Stacey Dingwall

A key concern following Brexit has been the status of international students (and academics) in the UK. Going into the general election, Theresa May has declined calls from universities – and some of her most senior colleagues – to remove students from her government’s target to cut migration by “tens of thousands”.

International students in the UK

In 2014-15, 437,000 students came from overseas to study in the UK, making up 19% of all UK university registrations that year. In February, the Office for National Statistics released net migration statistics which showed that long-term immigration to the UK fell by a “statistically significant” 23% to 134,000 in the year ending September 2016 – the lowest estimate recorded in almost 15 years. The number of international students coming to study in the UK accounted for much of this decrease, at 41,000. The majority of this figure was made up by students from non-EU countries (31,000).

In January, HESA released figures on students enrolled in higher education in 2015-16 which indicated that the number of students coming to the UK from EU member states had increased by 2%. These figures were collected before Brexit, however, so it will be next year’s edition before any impact, if at all, can be identified. Figures from UCAS published at the end of March, however, indicate a 6% decrease in the number of university applications from EU students on the previous year.

The ONS migration figures also showed that students from Asian countries made up 68% of the estimated 87,000 non-EU citizens who came to study in the UK during that year. While the UK remains the second most popular destination for international students in the world, after the USA, this is a fall of 23,000 on the previous year.

An economic impact worth billions

So why are some of Mrs May’s most senior colleagues rebelling against her decision to maintain international students within her migration reduction quota? One major reason is clearly the economic benefits generated for the country by the students. In March this year, research conducted by Oxford Economics for Universities UK suggested that in 2014-15, on- and off-campus spending by international students, and their visitors, generated a knock-on impact worth £25.8 billion in gross output to the UK economy. The 2014-15 international student cohort accounted for £10.8 billion of UK export earnings that year.

Tuition fees account for £4.8 billion of the total figure. The research also found that spending by international students supported over 200,000 jobs in UK university towns and cities and that the economic activity and employment sustained by international students’ off campus spending generated £1 billion in tax revenues.

Conservative rebellion and public opinion

Conservative MP Anna Soubry has pointed out that the economic contribution of international students continues even after they have completed their studies, in the form of “goodwill towards our country”, which “ often results in business deals as well as improved international relations and understanding”. It would appear that the public shares her sentiments: a poll conducted by Comres following the publication of Universities UK’s research found that 74% of those asked would like to see the number of international students in the UK either maintained or increased, after being told of the economic benefits they generate.

Despite this, the Prime Minister’s only concession so far has been to allow the newly created Office for Students to publish separate figures on overseas students, although they will still be recorded as part of the overall migration figures.  It has been suggested that a potential Conservative backbench rebellion over the government’s decision to remove the House of Lords’ amendment to the Higher Education and Research Bill on the issue was only defused by the decision to call a snap election – although MPs from both the Conservative and opposition parties have vowed to continue to fight the government’s stance. The Independent has launched a campaign – Drop the Target – supported by Soubry, which is demanding answers from the government on why they are continuing with the policy, which they argue is economically and socially damaging to the country.


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EU referendum – what the think tanks are saying

Euro Flag iStock_000003625536MediumBy Heather Cameron

With just under a month to go until the UK goes to the polls for the EU referendum, we take a look at what some of the major think tanks have been publishing on the debate.

Immigration and the economy have featured heavily in the referendum campaign. Negative attitudes to immigration, and in particular free movement within the EU has been highlighted as the strongest predictor of opposition to UK membership of the EU. And the possibility of a negative impact on the economy in the event of a ‘leave’ vote has been widely highlighted by the ‘remain’ campaign. Obviously, many of the think tanks have a specific agenda or political leaning, and this is reflected in how they are responding to the Brexit question.

What the think tanks are saying

Civitas has published a number of reports on Britain’s EU membership and how an exit from it would not damage the economy the way some would have us believe. Its most recent report on the trade benefits of EU membership has branded the argument that the European Single Market provides huge trade benefits to the UK as a ‘myth’.

Highlighting the example of Switzerland, Civitas has also argued that Britain could have much to gain from leaving the EU in terms of trade as it would be free to organise its own deals without EU restrictions.

Nevertheless, it also implies that retaining free trade with the EU Single Market, similar to the circumstances of Switzerland and Norway, would be important.

Others that appear to back ‘Brexit’ (Britain’s exit from the EU) have also alluded to the potential importance of the Single Market for trade. According to the Adam Smith Institute (ASI), the only viable option for the UK following a vote to leave the EU is joining the European Economic Area (EEA). This involves participation in the Single Market but from a position outside the EU. It allows for the free movement of goods, capital, services and people with the rest of EU.

Research on the referendum by the National Institute of Economic and Social Research (NIESR) has also covered the economic impacts of a decision to leave, in addition to immigration and the financial sector.

Unlike Civitas, NIESR has warned of ‘a significant shock to the UK economy’ if there is a vote to leave the EU, assuming the UK will no longer have a free trade agreement. NIESR analysis suggests that the impact would include lower Gross Domestic Product (GDP), a depreciation of Sterling, reductions in trade and foreign direct investment (FDI), and a potential fall in consumption and real wages.

Similarly, the Centre for Economic Performance (CEP) has argued that Brexit would have a negative effect on FDI. It estimates that Brexit would lead to a 22% fall in FDI over the next decade, which could cause a 3.4% decline in real income – about £2,200 of GDP per household.

Also in its analysis, CEP argues that leaving the EU would lower trade between the UK and the EU because of higher tariff and non-tariff barriers to trade. It suggests that the UK would also benefit less from future market integration within the EU. And while it acknowledges the economic benefit of a lower net contribution to the EU budget in the event of a vote to leave, it also suggests that incomes would inevitably fall, offsetting any savings from reduced fiscal contributions to the EU budget: “we consistently find that by reducing trade, Brexit would lower UK living standards.”

In terms of immigration, recent NIESR research suggests that there has been relatively little impact on the UK so far but that a vote to leave the EU could dramatically change immigration and its impact. One article looking at the long term economic impact of a reduction in migration found that a significant reduction in net migration would have strong negative effects on the economy by reducing GDP and thereby impacting on public finances.

The Institute for Public Policy Studies (IPPR) has published a range of material on the immigration and free movement issue. Its most recent report highlights the importance of the issue of EU migration in relation to the upcoming vote. The study found that there are concerns around migrants’ access to welfare, pressure on public services, crime and personal security, and wage undercutting. But at the same time, the advantages of free movement were also noted, in particular opportunities for UK citizens to live and work easily in other EU countries and the benefits of EU migrants filling skills gaps.

Similarly, the Fabian Society has also highlighted the importance of the immigration issue, noting that more than half of voters select it as one of their top three concerns when thinking about the referendum. In testing the effectiveness of both arguments, it was found that while the ‘remain’ campaign is slightly ahead and does well on first impressions, the ‘leave’ arguments seem to have more power to persuade.

Final thoughts

Full Fact is attempting to independently check statements made by both sides of the campaign. But whatever the outcome, we are guaranteed that Europe will continue to be a talking point after 23 June.


If you enjoyed reading this, you may also like our previous posts on political participation and the role of social media and voter turnout.

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Migration … getting behind the headlines

By Rebecca Riley

With the impact of refugees, asylum seekers and migration receiving high levels of media coverage at the moment, this blog highlights some of the statistics and recent research into the issues.

Asylum seekers and refugees’ nationalities change as crises hit. Briefings by The Migration Observatory at the University of Oxford highlight that Syrian refugees have risen from 5th in the league to 3rd in 2014, and given recent images in the news this position is likely to rise. The year before, Eritrea made first place. In the 12 months to June 2015 there has been a 62% increase in applications across Europe. In 1992/3 there was a surge in applications due to conflict in Kosovo and the Balkans, the last time similar numbers and make up of applicants were seen. In a normal year, 3 out of 4 applicants are men, of working age, as they are more able to make the journey and most likely to be in danger within an oppressive regime. In mass migration this changes dramatically to what we are seeing now, with families and lone children taking the risk in order to survive.

In 2014 59% of asylum applications were initially refused with 28% of them eventually approved. On average (in a normal year) 30% stay and are classed as refugees.

Over the same time period as these averages, the numbers of asylum seekers entering the EU have grown, but the UK share has shrunk in relative terms from 10% to 5%, less per capita than the European average. A report from the Children’s Society found that levels of support have not risen since 2011, representing a cut in real terms of almost 7.5%, pushing asylum seekers below the poverty line.

Underlying this there are complex trends however, with recent rises in applications notably from Nigeria, Ukraine and Iraq. Even without Syrian refugees there is a continuing rise in asylum seekers.

Net migration in the UK is at 330,000 in the year ending March 2015. Foreign born nationals now account for 8m of the population. The number is driven by both EU and non-EU migrants, in almost equal proportions. This proportion is similar across most EU countries. It is worth remembering that students account for a significant proportion of migration figures and (depending on the measure used) can account for half of net migration figures. The Observatory also highlights recent research that found that EU citizens born outside the EU (i.e. someone now a British citizen in London, born in Australia, America or Japan) are more successful at finding jobs, get better paid and are doing more skilled work than the average for EU citizens.

So what further analysis and discussion has there been?

A recent report by Centreforum, proposes reforms to the UK asylum system to ensure it operates in an efficient and humane fashion while maintaining public confidence, including reducing reliance on detention, reintroduction of the right to work and a humane response to women asylum seekers.

The Joseph Rowntree Foundation has examined the problems facing destitute migrants in the UK and looks at potential solutions, focussing on the legal aspects and the support services in place.

The Institute for Public Policy Research report on a fair deal for migration in the UK, looks at way to recognise the social and cultural impacts of migration, and makes recommendations for integration and an upfront levy for the use of free public services.

The common hypothesis that welfare is a strong magnet for immigrants has been contested by the Centre for European Policy Studies.


Further reading

The move-on period: an ordeal for new refugees

Welfare across borders: a social work process with adult asylum seekers

28 days later: experiences of new refugees in the UK

“What’s going to happen tomorrow?” Unaccompanied children refused asylum

Are people really afraid of immigration or are they afraid of change?

immigration centre

by Alex Addyman

Immigration is a hot topic – so hot indeed that according to recent research it could decide who runs the country in two years’ time. But, as recent research from The Economist highlights, the extent of immigration concern amongst voters and the evidence from previous immigrant waves is at odds. Continue reading