Rachel Reeves has called on Keir Starmer to agree to an “ambitious” migration agreement with the European Union that would permit young Europeans to work in Britain.
The Chancellor argued it would boost economic growth and potentially reduce the need for tax increases in the upcoming budget.
In an interview with The Times ahead of Labour’s conference this weekend, Reeves stated that a youth mobility scheme would be “good for the economy, good for growth and good for business”.
The Chancellor wants the Office for Budget Responsibility to assess the economic benefits of the Government’s so-called Brexit “reset” with Europe, including any youth mobility arrangements.
Ms Reeves added: “We want the OBR to score it.”
The proposed scheme would allow individuals aged 18 to 30 to stay for two years without gaining any right to remain permanently.
Eurostat data from 2020 shows there are at least 73.6 million people aged 15-29 in the EU – more than the entire UK population.
And though the Chancellor declined to specify exact numbers who might be eligible under such arrangements, reports suggest it could reach 50,000 annually.
This would significantly exceed Britain’s current youth mobility programmes with approximately 12 other nations, which granted just over 24,000 visas in 2024.
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Chancellor of the Exchequer Rachel Reeves has urged Downing Street to adopt the policy
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The Chancellor explained that the scheme’s ambition would be determined by three factors: “It’s around the ages of the young people.
“It’s around how long they can stay for. And it’s about the number.”
She emphasised that all these elements would matter for both young people and businesses.
The OBR has warned that Britain’s GDP is now four per cent smaller due to leaving the EU.
Rachel Reeves has issued the warning to Keir Starmer
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But research conducted last year indicated that if net migration rose by 31,000 annually through a youth mobility programme, GDP could grow by 0.45 per cent over a decade.
The House of Commons library has calculated this could generate up to £5billion yearly, funds that might otherwise require tax increases to raise.
Reeves argued: “As a result of that reset in May, we think the economy will be stronger.”
She claimed that controlled migration benefits both the economy and Britain, and said the scheme would be time-limited.
Reform UK leader Nigel Farage has cautioned that such plans would “effectively be a back door to free movement.”
Meanwhile, recent polling indicates his party could potentially form a majority Government if an election occurred today.
Fresh polling from YouGov showed Labour would return only 144 MPs to the Commons, a dramatic fall from the 411 seats the party took home last summer. The results also left Conservatives reduced to a humiliating 45 seats, putting them well behind the Liberal Democrats on 78.
The SNP would see some recovery on 37 seats, with a small boost for the Greens on seven seats and Plaid Cymru on six seats.
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Ms Reeves faces a fiscal “black hole” which could be worth up to £50billion ahead of her November 26 budget, which she must address through tax increases.
She hopes to reduce the required tax rises by persuading the OBR to consider economic benefits from government policies.
This includes the EU reset, trade agreements and planning reforms.