IMMIGRATION has again become one of the major political, economic and social issues in the UK and Guernsey. Since the enlargement of the EU in 2004, citizens of the 10 accession countries have been granted unrestricted entry to the UK and 600,000 eastern Europeans have embraced the opportunity in that time.

The entry of Romania and Bulgaria in 2007 has raised concerns that there will be a fresh deluge of immigrants next year and the debate is centring on the possible restriction of their movement to the UK.

In Guernsey, a recent opinion poll suggested that many islanders were concerned about the impact of immigration on level of crime.

Meanwhile, figures from the Policy Council show that without immigration, there will be a catastrophic natural decrease in the population of the island during this century.

Yet its growing dependence on the taxation of employment and the need to grow the economy to fill the looming fiscal deficit underline the need to increase the population.

But this growth cannot happen without immigration.

Guernsey experienced practically zero net migration between 1991 and 2001, but there was net immigration of 4,500 in the 20 years from 1981 to 2001.

Immigration therefore accounted for the majority of the population increase during that time and continued to do so until 2004, which offers the latest available figures.

Then, the population stood at 60,382 and the island had a population density of 958 people per square kilometre, far higher than the UK and Isle of Man and even 26% higher than Jersey.

The island is therefore relatively overcrowded.

There is clearly a tension between the constraints that Guernsey’s limited land imposes on its ability to expand the population and the need to increase that population to facilitate the economic growth essential to our standard of living and low taxation regime.

Immigration also raises other issues such as social tensions, housing provision, pressure on public services and higher levels of crime.

It also has many implications for the economy.

Economic growth depends on the quantity and quality of a nation’s factors of production.

Immigration will deliver the extra labour that Guernsey struggles to provide internally, thereby allowing the actual and potential output of the island to grow.

Aggregate demand is strong enough in the local economy to create more employment, which will then generate more taxation and thus increase economic activity.

Companies will be able to provide the goods and services the market clearly demands.

Guernsey enjoys full employment, but suffers from a chronic shortage of skilled and unskilled labour.

Immigration helps to relieve that shortage and if it is properly managed by admitting only young, motivated and educated people, it can increase the productivity of labour as well as the quantity.

That will also raise potential output and economic growth.

Immigrants tend to be enterprising and flexible, which raises output directly and indirectly by providing more competition for local labour.

Immigration also allows companies to become more flexible by adjusting their workforce according to demand. However, it can lead to a rise in unemployment if immigrants displace local, unskilled workers or they are unable to find employment.

Guernsey avoids this by insisting on an offer of employment prior to arrival, but immigrants can undermine local labour by forcing wages down.

The rise in the labour supply that immigration produces will inevitably lower wages, unless there is a corresponding increase in the demand for it.

Lower wages lead to lower inflation, so businesses should be more competitive and confident to invest and those on fixed incomes should suffer less.

Immigration fills the skills shortages in certain industries so that the prices of some goods and services are able to fall.

Guernsey finds itself in a very difficult position when it comes to the issue of immigration.

We need it to generate economic growth and to fund our excellent public services, but it will undoubtedly compromise our general quality of life.

Zero economic growth would also damage that quality, so we need to understand what balance the community desires.