What would three million Hong Kong arrivals do to the UK economy?

Tim Wallace
Protest in Hong Kong - PHILIP FONG/AFP

In the days after the Brexit vote, Boris Johnson wrote for the Telegraph of his desire to re-open the UK to the world as “a truly global Britain”.

The country sought a “new role”, he said, seeking to be “humane, compassionate, principled – to do good around the world, and to exploit growth markets to the full.”

Much of this was pooh-poohed by Remainers characterising Brexit as an insular move, turning the nation’s back on the rest of the world.

But this month the UK’s offer to allow almost three million people from Hong Kong to move to Britain and take citizenship shows the slogan has meaning.

As far as “growth markets” go, it could also help turn Britain into just such an economy.

Hong Kong - ISAAC LAWRENCE /AFP

The Centre for Economics and Business Research estimates that if one-tenth of those eligible move to the UK, it could boost GDP by £12bn.

If the flow is sustained and one million arrive over a five-year period, it could be more like £40bn.

The analysts call the potential arrivals “a ray of sunshine”.

Hong Kong is one of the few nations which performs better than the UK on the World Bank’s human capital index, which seeks to measure educational attainment and the economic value built up in the population.

This plays out in the jobs market. Hong Kong’s pre-pandemic unemployment rate of 3.1pc was even lower than Britain’s exceptionally low 3.9pc.

Average earnings were the equivalent of £1,856 per month at the end of last year, not too far below the UK’s average of £2,154.

The CEBR puts average productivity per year at £69,900, which is higher than the UK level of around £60,500.

The high-productivity industries of finance and insurance account for 7.6pc of its employment vs the UK’s 4pc. The City of London would welcome a slice of the 293,000 workers in the rival financial hub.

Almost one-in-six work in real estate and professional business services – important industries in the UK

When the Prime Minister wants to “build, build, build”, it is handy that 8.6pc of Hong Kong’s workers are in construction, just above the UK’s 7pc.

It seems unlikely that all three million would relocate to Britain, however. Around 300,000 people in Hong Kong have British National (Overseas) passports. The offer extends to them and their dependents.

Last year 677,000 people migrated to the UK while 407,000 left, leaving net immigration of 270,000. In this context tens or even hundreds of thousands of new arrivals would not radically alter the usual flows in and out of the country.

It would change the mix, however. Official figures from 2016 indicated there were around 9,000 Hong Kong nationals resident in the UK, as well as 95,000 people who were born in Hong Kong, 74,000 of whom were British citizens.

The CEBR notes that protesters, who might have the most need to flee, tend to be relatively young. This could mean they are less productive than average, but are also less reliant on state services such as healthcare and education.

In one sense, it is not ideal timing to absorb new migrants into the jobs market. With millions of workers on furlough and unemployment rising, a skills shortage is not a pressing problem.

On the other hand, new arrivals bring their own demand to the economy, as well as resources as workers. Entrepreneurial migrants could bring particularly significant benefits for the country in the long-term.

Look to history’s examples. Almost 30,000 Ugandan Asians, for instance, came to the UK after their expulsion by Idi Amin in 1972 – a gloomy economic decade of stagflation, oil price shocks and strikes in Britain.

Priti Patel - PIPPA FOWLES/Shutterstock

Arriving often with nothing but the clothes they stood in, they are now famed as an outstanding example of successful integration. The retail industry was radically altered by the migrants, while businesses such as Domino’s Pizza were founded by the new arrivals. Priti Patel, the home secretary, was born to parents who moved from Uganda in the 1960s.

Speaking on the 40th anniversary of the expulsion Lord Popat, who arrived from Uganda in the UK a year earlier, praised their contribution to the nation.

“Today in Britain, Ugandan Asians play a sizeable role in the national economy,” he said in Parliament. “While exact figures are not easily available for the impact of this one community, Britons with south Asian roots today make up 2.5pc of the population but account for 10pc of our national output. The number of Ugandan Asians on the rich list is also sizeable.”

Parallels abound with Hong Kongers.

Close British ties before and after the handover in 1997, widespread use of English – just over half speak the language, with a far greater share of the younger generation taught it at school – and similarities in the legal system and elements of business practice would all ease any move.

“Global Britain” could quickly pay dividends.