Jeremy Warner's Outlook: Emigration becomes the new British disease

Most extrapolations based on official statistics turn out to be complete nonsense so we should perhaps beware of over interpreting Office for National Statistics data published yesterday that shows more Britons are quitting these shores to live abroad than at any stage since records began - 190,900 of them last year, up from 185,700 the year before.

Most extrapolations based on official statistics turn out to be complete nonsense so we should perhaps beware of over interpreting Office for National Statistics data published yesterday that shows more Britons are quitting these shores to live abroad than at any stage since records began - 190,900 of them last year, up from 185,700 the year before.

In fact, the numbers may not be terribly instructive, as they are based on a survey of international passengers conducted at major airports and ferry terminals. The survey is in itself bound to be imprecise, and it would in any case miss all those who go abroad with the intention of only taking a holiday but never return, as well as those who do the opposite - go with the intention of emigrating but return, disillusioned, within a few months.

Furthermore, the survey measures only those who are leaving the country for more than a year. Some of these people will be leaving for good, but the great bulk are exiting only for extended work purposes, gap years, to stay with friends and relatives, or to attend an overseas educational establishment. At some stage they will return. The survey is about population flows, insists the ONS, not about emigration.

None the less, despite the shortcomings of the data, it is almost certainly true that record numbers of people are indeed emigrating. There are all kinds of reasons that can be postulated for this phenomenon - from the weather, to quality of life and the parking ticket that finally breaks the camel's back. But what does seem clear is that it is the very reverse of what drove huge numbers of Londoners to emigrate to America after the Great Fire of London, or great swathes of Irishmen and women to the United States during the potato famine of the mid-19th century. Today's wave of emigration is prompted not by poverty or destitution, but prosperity. What's more, the numbers wanting to get out are more than compensated for by the numbers trying to get in.

The emigrants are on the whole relatively well off retirees, or "no way back" europhiles intent on escaping the rat race of Britain for the good life of the Tuscan hills or the lesser known regions of France. Many of them will also be cashing in on the long housing boom to buy a property overseas at half the price and bring their children up as Australians, Italians and French.

Should we be concerned about this trend? If the oldies or work shy that are leaving are compensated for by young keenies coming in, then perhaps not. The trouble is that those coming in tend to be moneyless, while those going out are, on the whole, relatively prosperous. Many of the long-term emigrants will have money, and quite a few of them will be quite enterprising too. They are not the sort of people an economy should be willing to lose.

There is, in any case, a consequent export of capital going on, which though at the moment of only marginal importance, may turn into a veritable flood as the population ages and more decide to emigrate to warmer, more hospitable climes with better health care. Britain may be the most prosperous economy in Europe, for the moment at least, but that doesn't count for a fig if in growing numbers we don't want to live here.

Pre-Budget report

Still no date for the pre-Budget report, which has presumably moved permanently to the later slot of early December. The one thing we can be sure of is that the Prime "give us a clue" Minister will be the last to know, for he is again said to be barely on speaking terms with his next door neighbour, the Chancellor. For a second time, Mr Blair has reneged on the understanding he had with the Chancellor to stand aside in favour of Mr Brown after the next election. Now he's vowed to carry on for a third term and, if he could, he would kick Mr Brown upstairs to the Foreign Office once safely back at No 10.

While the Chancellor plots his political counter attack, he must also prepare the economy for an election. There's virtually no scope for a tax giveaway, though he will again delay the inflation adjustment to excise duty on petrol. On the contrary, Mr Brown must summon all the black arts of the illusionist just to convince that he can hold his present course.

In this he is greatly helped by his flexible friend, the golden rule, which allows him to borrow as much as he likes provided he balances the Budget over the economic cycle as a whole. OK, so that's an unduly simplistic and unfair way of characterising it, but the wonderful thing about the golden rule is that the cycle can be extended, which would allow the Chancellor to borrow more than he said provided he can credibly claim it will be earned back again before the cycle ends.

The golden rule also has the more general effect of deflecting attention from the size of the budget deficit, which was 3.4 per cent of GDP last year, and is likely substantially to overshoot the Treasury's forecast of 2.8 per cent for this year. By any standards that's high, higher for instance than is allowed by the eurozone's Stability and Growth Pact, which stipulates just 3 per cent. But if the Chancellor can claim such a big deficit falls within the golden rule, that seems to make it perfectly fine.

Whatever. Even on his own calculations, the Chancellor has got very little headroom left, and unless he makes his forecasts more optimistic than they already are when he delivers the pre-Budget report, there's virtually no wriggle room at all for tax cuts. That's going to make the report a dull affair with few surprises. For the moment at least, Mr Blair won't have to do much guessing. He may not be told what's in the pre-Budget report, but nor does he need any clues to know the answer.

BT (slight return)

Sir Christopher Bland, chairman of British Telecom, is threatening to abandon the company's £10bn investment in a next generation backbone network - dubbed the "21st century network" - unless he gets joy from the regulator on pricing for wholesale broadband services. His remarks rather took the shine out of a triumphant announcement from BT Wholesale that it had achieved a record number of broadband connections in the three months to the end of September, allowing Britain as a whole to overtake Germany in terms of broadband penetration per head of population.

In fact, this success has very little to do with BT, and virtually everything to do with the enormous pent-up demand that existed among Britons for broadband services if only they could be made widely available at a reasonable price. Sir Christopher, to his credit, has begun to make this possible, but boy has it been a long haul. Just think where levels of penetration would be if prices were as competitive as they are in Japan, America, or even Germany.

Still, progress is progress, and BT is right to complain about the way its pricing policies continue to be subject to regulatory restriction. New broadband signings are at record levels in BT Wholesale, but in its customer facing business, BT Retail, the company is fairing much worse, with only 30 per cent of the market. This is largely because the prices BT Retail has to pay Wholesale for a broadband connection are a lot higher than its competitors are able to achieve using rival networks.

As Sir Christopher says, BT is caught between a rock and a hard place. Either it is allowed to reduce its wholesale prices, or BT Retail goes the local loop unbundling route, allowing it to install its own equipment at BT exchanges so that it can access the same cheaper network prices used by competitors. As long as BT remains one company, this latter course would be ridiculous. BT would only be cutting off its nose to spite its face. The benefit achieved by Retail would cause equal and opposite damage to Wholesale.

Of course, he could demerge the two, but then round at BT they are not allowed to mention the B word. Even Pierre Danon, head of BT Retail, won't argue for a break-up, despite the fact that it would finally give him his own trainset to operate.

jeremy.warner@independent.co.uk