The European Union began life in the 1950s as an economic project consisting of just six European countries (France, West Germany, Italy, Belgium, Luxembourg and the Netherlands) within which trade could take place with no barriers. By the 1970s the UK, Denmark and Ireland had joined and in the 1980s the Community had grown again to encompass Greece, Spain and Portugal. Known originally as the European Community it became the European Union in 1993 with the signing of the Maastricht Treaty. This treaty also established the single currency (which came into circulation in 2002) and marked a major extension of the European project.
In 2004 the European Union experienced its largest enlargement with the accession of eight new East European states as well as Malta and Cyprus. In 2007 it grew larger still with the accession of Romania, Bulgaria and then Croatia in 2013.
The EU is now a political and economic union of 28 member states with a population of over 500 million citizens and which covers an area larger than India.
Citizenship of the EU (by way of citizenship of a member state) now gives the holder the right to live, work and study in another member state and around 11 million EU citizens live in another member state.
This includes about 2.7 million citizens of another EU country who live in the UK and 1.3 million British citizens who live elsewhere in Europe. (See here)
Free movement was originally designed for workers and the self employed to take up work in another EU country. This was gradually expanded to include job seekers, students and those of independent means. Meanwhile, case law has removed the requirement to be economically active.
This systematic removal of restrictions on EU migration coincided with an expansion of the EU to less wealthy countries with the result that the number of people migrating grew very substantially.
Net migration to the EU has historically been quite low. In the almost 30 years between 1975 and 2003 it was only about 8,000 per year. The countries that constituted the EU in 2003 were the 15 countries of Western Europe and, while Southern European countries were not as wealthy as some of the Northern European ones, there were not huge wage disparities that encouraged massive flows of people.
In 2004, the EU expanded to encompass eight East European countries (known as the A8). These countries were considerable poorer than Western Europe; the UK’s level of GDP was five times higher than that of Poland when the accession took place. This was a watershed moment for European migration since for the first time there was a massive economic incentive for EU citizens to move to other parts of the Union. The decision by the then Labour government not to impose transitional controls on new workers while most other countries did (only Ireland and Sweden opened up their labour markets to the new 70 million citizens) meant that the majority of those that moved from East to West came to the UK during the seven year transitional period.
In 2004 the A8 population in the UK was 167,000; it increased by around 100,000 per year until 2013. Similarly, when Romania and Bulgaria (the A2) joined the EU in 2007 there was a massive wealth gap between these two countries and the UK. The government did impose transitional controls on workers but when these controls were lifted in 2014 the UK’s GDP was almost five times higher than that of Romania and Bulgaria; what followed was a significant net flow that is expected to continue at around 50,000 people a year.
Meanwhile, the economic crisis which has engulfed the Eurozone area has resulted in very high levels of unemployment across Southern Europe and has created the conditions whereby for the first time there is a significant net inflow of migrants from the old member states such as Greece, Spain and Italy.
The UK is home to around 2.7 million EU residents, half of whom are from the old Western European nations and half from the newer states of East Europe.
The majority of EU migrants have come to the UK for work and 1.8 million are in employment with the remaining 900,000 being either students, retired or perhaps working in the home.
The average economic profile of EU migrants varies according to whether they are from the EU14 or the EU10. Workers from the EU14 perform better than their UK born counterparts in terms of their employment rate, earnings and rate of benefit claim. Meanwhile the EU10 are more likely to be in work than the UK born but fare worse in terms of their earnings and their rate of benefit claims. (See here) The fiscal contribution of all EU migrants is estimated to be around zero, meaning that EU migrants pay about as much in tax as they take in benefits. (See here)
It is often claimed that between 2000 and 2011 recent migrants from the EEA have contributed £20 billion to the Exchequer. This is based on a UCL paper published in 2013 which made very favourable assumptions. More realistic assumptions reduce this contribution significantly. (See here and here)
EU migration is now more than double what it was in 2010 and almost half of all net foreign born migration to the UK. It is therefore part of the wider debate about reducing immigration The government has sought to deter new migrants and make the UK less attractive to those without work by restricting access to benefits such as jobseekers allowance, child benefit and child tax credit for the first three months and by introducing tighter rules for those not in work after six months. However, these measures are not likely to make any substantial difference to the overall level of migration.
Looking to the future it is clear that reducing overall net migration will require concessions from Europe on free movement. The Prime Minister has stated that he wishes to see benefits withheld until EU migrants have contributed for four years. The efficacy of such a policy is not clear since the push factors of unemployment and low wages in home countries will remain (See here and here) and these conditions show little sign of abating. (See here).
Updated September 2015