Tony Blair’s failure to control the flow of workers from eastern Europe fuelled the anti-immigration sentiment that led to the UK’s Brexit vote, the chancellor, Philip Hammond, said.
Speaking at the World Economic Forum in Davos, the chancellor launched a strongly worded attack on the former prime minister’s open-door policy when eight former communist countries joined the EU in 2004.
Britain was one of only three countries – alongside Sweden and Ireland – that decided to have no transitional arrangements to limit the flow of people from eastern Europe looking for work and Hammond said the results of that decision were still being felt.
The chancellor said the Brexit vote was not the result of the anti-trade and anti-globalisation feeling that manifested itself in the US presidential race.
“But what there was clearly was a strong strand of feeling against uncontrolled migration. And I lay the responsibility for that squarely at the door of prime minister Blair who failed to impose transitional regime in the UK in 2004.
“So while other countries in Europe smoothly transitioned the A8 members [Accession 8] and the freedom of movement from A8 members Britain took the full force of the tide in 2004, and that created a public perception which we still haven’t shaken off to this day.”
Hammond said the UK was not anti-migration and that only a minority thought the borders should be completely closed.
“It is very important to the British people that we control our borders, but most of them do not want to use that control to shut the borders, they simply want to have the control,” he said.
The chancellor said departure from the EU and from the single market did not mean there would be no migration. He said Britain would want to attract skilled workers but wanted the ability to control the flow of unskilled, cheap labour.
“What we’ve said clearly is that we cannot accept the principle of free movement,” Hammond said, adding that any EU national could simply change their place of residence from Bulgaria or Romania to the UK. “We can’t accept that any more.”
Oxford university professor Ngaire Woods said it would be a serious mistake if Britain included foreign students in its immigration curbs post-Brexit.
“If we make them part of Britain’s immigration debate we’ve smashing our own kneecaps before even beginning the race.
“Don’t kneecap your best asset. Let us thrive, make sure that immigration policies tell the world that Britain is open and welcoming to the best most entrepreneurial, energetic talent from all over, without restraint and constraint.”
Hammond said the government had no intention of kneecapping itself and would still need migrants for an economy operating at close to full employment.
The chancellor said the UK economy had confounded those predicting immediate dire consequences from the result of the referendum in June, largely due to the resilience of consumer spending.
But he warned that growth was set to slow this year as the impact of the weaker pound raised inflation and eroded spending power.
“A floating exchange rate is a smooth and efficient transmission mechanism that deals very effectively with an external shock,” the chancellor said.
“But currency depreciation is now feeding into inflation which will increasingly affect consumer behaviour this year, hence the lower forecast for growth in 2017.”
When the figures for the fourth quarter of last year are released later this month, it is expected that the economy will grow by around 2% in 2016. The expectation is that expansion will be about 1.5% in 2017.
