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What does Brexit mean for Bangladesh?

  • Published at 06:22 pm June 23rd, 2016
What does Brexit mean for Bangladesh?

The UK is in the midst of Brexit fever.

A referendum on whether the UK should leave or remain in the European Union will be held on June 23.

The most recent opinion polls indicate that British voters are divided pretty evenly on the referendum.

Notwithstanding the polls, the campaign to leave or remain has distilled down to a simple argument between the opposing camps.

Those in favour of remaining in the EU, including the British Prime Minister David Cameron, argue that the economic benefits of staying outweigh all other considerations.

The Leave campaign, led by former London Mayor Boris Johnson (a once-close friend of David Cameron and a fellow Conservative), is arguing that economic doomsday predictions around leaving the EU are overblown at best.

More importantly, the Brexiters have made immigration the central issue of their campaign.

They argue that the UK needs to leave to free itself from European laws on free movement of workers, which has led to a large influx of Eastern Europeans into the UK over the past decade.

Chart 1

A bit of background on the immigration issue

In 2004, the EU expanded to include 10 new Eastern European members, such as Poland, Romania, Lithuania, and others. At the time, the UK government estimated that the EU’s expansion would lead to about 15,000 Eastern Europeans migrating to the UK every year to find better jobs.

In reality, data from the UK’s Office of National Statistics shows that Eastern European migration into the UK has averaged well over 100,000 a year over the last decade.

For example, in 2004, there were only 100,000 migrants from Poland, Lithuania, and Romania living in the UK (let’s call them EE3 countries), compared to almost 400,000 migrants from Bangladesh, India, Pakistan, and Sri Lanka (let’s call them SA4 countries).

The very issue that compelled the Conservative government to call the referendum has, not surprisingly, taken centre stage. In the process, it has drowned out all other rationalist arguments on the economic and national security benefits of the UK staying in the EU

A decade later, in 2013, there were more than 1 million migrants from EE3 countries compared to little over 650,000 from the SA4 countries, as illustrated in Chart 1.

It is worth noting that these figures relate to migrants who had recently arrived in the UK, not UK citizens of Eastern European or South Asian ethnicity.

The UK Conservative Party, being a centre-right party, found the large, unanticipated migration trends deeply disturbing and Prime Minister David Cameron promised to hold a referendum on the UK’s membership in the EU if his party won re-election in 2015.

A year later, after a pretty convincing 2015 election win, Prime Minister Cameron and his government now finds themselves in a major bind over the referendum.

The very issue that compelled the Conservative government to call the referendum has, not surprisingly, taken centre stage.

In the process, it has drowned out all other rationalist arguments on the economic and national security benefits of the UK staying in the EU.

Chart 2

Why the comparison with South Asia?

The comparison between migration from Eastern Europe and South Asia might seem random, but it has strangely been brought into play by the Leave campaign.

Keen to ensure that their main argument for Brexit is not seen as being blatantly xenophobic, Leave campaigners have argued that limiting Eastern European migration into the UK would create opportunities for more migration from South Asia.

This may just be campaign rhetoric, empty promises made in the heat of a political battle that will amount to little once the referendum is over.

But nevertheless, it is worth asking -- if Brexit does lead to more South Asian migration into the UK, how much will Bangladeshis benefit?

The Financial Times in an article on May 19 refers to Pasha Khan, the president of the Bangladesh Caterers Association, stating: “Leaving the EU would ease the staff shortage in his [catering] industry.”

But digging deeper into UK’s population and migration statistics reveals that most migrants from South Asia have come from Pakistan, followed by India and Bangladesh.

Chart 2 illustrates that the number of Pakistani migrants living in the UK has increased from 200,000 in 2004 to almost 350,000 in 2013, an annual average increase of 5.5%. Growth in Indian migration to the UK has been even higher at 7.5% per annum.

On the other hand, the number of Bangladeshi migrants in the UK has increased from just 58,000 in 2004 to 73,000 in 2013, which is equivalent to an annual average growth rate of only 2.3%.

To the extent that historical trends can be a predictor of the future, these figures show that Bangladeshis are not likely to benefit significantly from Brexit.

If the UK does choose to quit the EU, and a subsequent (conservative) UK government makes good on its promise to take in more migrants from South Asia, it is Pakistanis and Indians who stand to benefit the most.