Foreigners 'cut inflation and avert skills shortage'

High immigration levels over the past decade have provided an invaluable boost for the British economy, an influential think-tank has concluded.

The Work Foundation rejects assertions that foreign workers have taken jobs from Britons and forced down wages. Its report, released today, argues that the influx has in fact helped to reduce inflation and interest rates and enabled the country to avert damaging skills shortages.

Britain has been kept on a "stable growth path" thanks to immigration, the foundation says, with newcomers boosting the economy by 1 per cent in 12 months after the European Union expanded in 2004.

The conclusions contradict the recent analysis of the Lords Economic Affairs Committee, which said competition from immigrants had a damaging impact on the low paid and on training for British workers.

The think-tank argued that the rising national minimum wage had established a "strong pay floor", which was protecting workers from exploitation.

Its judgement followed scrutiny of immigration and labour market statistics as well as studies on the historical effects of migration. The figures suggested that immigration since 1997 has had no significant impact on unemployment, with the total number in work reaching a historic high of 29 million last year as newcomers fill vacancies rather than displacing Britons.

The report, Migration Myths, attacks politicians and commentators for repeating unfounded claims: "Hard evidence can seem scarce and personal experience or anecdotal evidence is too often seen as a reasonable substitute." David Coats, its author, said: "They are working, they are paying taxes and contributing to the UK economy."

Mr Coats said: "The Government has had a hard time over immigration not because it has lost control of the issue, but because it has failed to tell a compelling story based on consistent high-quality information."