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07 December 2015

Tusk to Cameron: “in-work benefits” may be a deal-breaker (to save 0.1% of GDP and ensure Cameron is in the history books!)

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Council President Tusk responded to the “Dear Donald” letter from Prime Minister Cameron and underlined that the most difficult issue would be “people coming to Britain from the EU must live there and contribute for four years before they qualify for in-work benefits or social housing.”

In my November 11 blog (here), I analysed the data from the Department of Work and Pensions published with the Prime Minister’s letter. This showed that only about 200,000 EU arrivals were claiming these benefits – at a cost of around £1.5 billion. This equates to around 0.1% of GDP. The UK now has full employment and the absence of these people would pose significant economic problems.

Media reports suggest that the Prime Minster is threatening to lead the campaign for Brexit if he does not get his way. The cartoonists will have a field day for the history books if the Prime Minister breaks up the United Kingdom and plunges the economy into recession in order to save 0.1% of GDP. But he will be able to proclaim a policy triumph by stopping the labour market over-heating…

© Graham Bishop

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