Friday, May 31, 2013

Analysis: Losing the 'right to reside test' could cost the UK economy up to £2bn a year, as EU says it 'discriminates against migrants'

The row over benefits centres on two of the most explosive issues in British politics: welfare and immigration.

In 1994, the then Tory government introduced a so-called ‘habitual residence’ test to limit the number of state hand-outs available to migrants.

It stated that, in order to qualify for means-tested support, a person must have a job, be self-employed, a student, actively seeking work or have enough funds to support themselves.

This test, which was applied to UK nationals, was considered by Brussels to comply with EU rules on free movement.

The controversy centres on a second rule, called the ‘right to reside test’, introduced by Labour in 2004 to prevent benefit tourism when the EU expanded to eastern Europe in 2004.

It states that the economically inactive, who are neither in work nor seeking work, must be self-sufficient if they want to live in the UK. They are banned from receiving income support, income-related employment and support allowance, income-related jobseekers allowance, pension credit, housing benefit and child benefit.

The EU says the rules are discriminatory and therefore illegal because British citizens automatically pass the right to reside test.

The cost to the UK taxpayer of lifting the controls is hard to quantify as it depends how many jobless migrants will move here specifically to claim benefits. However, ministers consider the worst case scenario to be £2billion. Even if no new migrants arrive, the bill for lifting restrictions on those already here will be £155million a year.

The political ramifications of the EU’s decision to drag Britain to court could be huge.

If Strasbourg judges find against the British Government, it will be stripping Westminster of the right to control both our borders and access to the welfare state, encroaching into areas that are historically supposed to be off-limits.

Unelected officials will be trampling over the express wishes of our elected politicians and more of Britain’s sovereignty will be lost.

The verdict is due to be delivered in 2015. This could have a huge impact on the General Election campaign. The Tories will have a stark choice: promise to defy the EU, which has the power to fine us £225million a year until we comply, or risk seeing more votes haemorrhage away to UKIP.


Immigration behind property price rises in Switzerland

Swiss immigration is expected to slow, taking pressure off the country’s booming property market, according to Zuercher Kantonalbank.

Reduced immigration will probably cut the rise in Zurich apartment prices to 3.5 percent this year and 3 percent in 2014 from 7.2 percent in 2012, the bank said in a report today. Luxury properties may be particularly affected because of a decline in skilled immigrants from Germany and other central European countries. Prices for such properties may be reaching a turning point, ZKB said.

“Due to lower immigration in the coming years, we expect more moderate price increases in the Swiss property market,” ZKB Chief Economist Anastassios Frangulidis said in the report.

Immigration and cheap credit have bolstered demand for housing. With the central bank easing monetary policy to take pressure off the franc, Switzerland is experiencing the biggest surge in real-estate prices in 20 years.

A net inflow of 103,000 people reached a historic peak in 2008 after years of strong economic growth and an agreement removing immigration obstacles between Switzerland and the European Union that took effect in 2002. The limit on residence permits for EU citizens that Switzerland imposed in April is one of the factors limiting further growth in immigration. Net immigration in 2011 fell more than 40 percent compared with 2008, according to the report.

Education Demand

While less employment will be available in construction and the public sector and the financial industry will be cutting staff, industrial and tourism jobs should grow in the coming five years.

That means future immigrants will need to have different professional skills and education, ZKB said. Industry and tourism probably will attract immigration from countries with high unemployment rates, including Spain, Italy, Portugal and Greece.

Increasing numbers of Swiss citizens with good academic training might be closing a shortfall in highly qualified workers and help offset a decline of about 30 percent in net German immigration between 2008 and 2011, according to the report.


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