There is a kind of economic growth that is almost too easy to get. Add people, and the economy gets bigger. More workers means more output, more spending, more tax receipts, and a headline GDP figure that climbs. For two decades Britain leaned on that lever, and for the last decade Malta has pulled it harder than almost anyone in Europe. The trouble is what the headline hides.
The arithmetic nobody campaigns on
National income is, roughly, the number of people working multiplied by what each of them produces. You can grow the first number or the second. Bringing in workers grows the first. It does very little for the second, and the second is the one that decides whether the average person actually ends up better off. A bigger economy split across more people is not the same thing as a richer country, and the gap between those two ideas is where most of our politics now lives.
The British numbers make the point. Net migration to the UK peaked at roughly 900,000 in 2023 before visa and policy changes pulled it down to a provisional 171,000 in the year to December 2025, and these are official estimates that get revised, sometimes heavily. Over the same stretch, real GDP per head grew by just 0.1% in 2024 and about 0.7% across the first half of 2025, leaving output per person still around 1% below where it stood at the end of 2019. The economy got bigger. The average Briton did not.
Underneath that sits the productivity problem, the one economists have circled for fifteen years. Output per hour worked grew about 0.5% a year between 2010 and 2023, less than a third of the 1.6% Britain managed from 1997 to 2010, and it actually fell by around 1% in 2024. A country that keeps adding workers but not output per worker is running hard to stand still.
Malta is the same film at double speed
Malta shows the British story compressed into a decade. Foreign nationals reached 158,368 by 2023, about 28.1% of the population, and across a ten-year span the non-Maltese population grew by roughly 131,000 while the Maltese population rose by just 5,660. Foreign workers, more than 105,000 of them by the end of 2023, now carry a large share of the work, with an activity rate of 87% against 66.5% for Maltese nationals. The model delivered fast headline growth and one of the higher GDP-per-head figures in the EU on a purchasing-power basis, around 67,000 dollars in 2024. It also delivered the strain that everyone on the island can see in the traffic, the rents, the building sites and the schools, and a quiet question that no figure answers: what is all this growth actually for.
Why the model is so tempting, and why it sours
Let me be fair to it, because the case is real. Bringing in workers is fast. It fills genuine shortages in care, construction, hospitality and health that cannot wait. And it is far less painful than the reforms that lift productivity. No minister has to face down a planning lobby, a union or a Treasury spreadsheet to issue a visa. That is precisely why it is so seductive, and why it so often becomes a substitute for the hard work rather than a complement to it.
The bill simply arrives later. It comes as housing that cannot keep pace, public services spread thinner across more people, wages that stop climbing, and a politics that curdles when voters sense that the country's headline and their own lives have parted company. Both countries are now paying that bill, and pretending the growth was free is the least honest thing a politician can do.
So can it be replaced? Yes, in only three places
If the growth is not to come from more people, it has to come from somewhere, and there are only three other places it can come from.
The first is productivity, which means output per worker, and that mostly means capital. Give people better tools, machines, software, transport and energy, and each hour of work produces more. Here Britain has been failing for a generation. Business investment runs at about 11.1% of GDP, the second lowest in the G7 with only Canada below us, which leaves a capital gap of roughly 38% against comparable economies. British workers produce less per hour partly because they have less to work with. That is a fixable problem, and we have chosen not to fix it.
The second is participation, which means getting more of the people already here into work. Raising the employment rate, drawing back the economically inactive, the long-term sick and the older workers who left early, and removing the childcare costs that price parents out. This is growth that asks nothing of the housing market and brings in not a single new arrival.
The third is the slow, compounding stuff: skills, research, energy and, above all, a planning system that decides whether a factory, a laboratory, a grid connection or a house ever gets built. Britain's deepest economic weakness is not a shortage of ideas or workers. It is that we have made it too hard to build the things that make workers more productive.
Why it is honestly hard
None of this is a secret, and I would rather say plainly why we reach for migration instead than pretend the alternatives are simple. They are not.
They are slow. Productivity compounds over a decade; a visa shows up next quarter. They need stability that Britain refuses to provide, chopping and changing capital allowances and tax rules so often that no firm can plan a fifteen-year investment against a three-year policy. They demand reforms, to planning, to welfare, to skills, that each create a visible loser now in exchange for a diffuse winner later. And the payoff almost always lands after the next election, which is exactly why governments of every colour keep choosing the easy lever. Malta has its own version of the trap: a narrow economic base and whole sectors built on the steady supply of cheap labour. Moving up the value chain means some of those sectors shrink, and that is a real cost to real people, not a debating point.
What I would actually do
If I had to set a direction, I would do five things, and I would be honest that four of them hurt before they help.
First, make investment worth making. Fix the headline business-tax framework and capital allowances for a full parliament and refuse to touch them. Certainty is itself an incentive, and it costs nothing. Second, fix the thing that blocks everything else, which is the planning system. The house, the lab, the reservoir, the grid connection. Until Britain can build again, every other lever is bolted shut. Third, treat skills as infrastructure rather than a line item, funding the technical and vocational training that genuinely raises output per worker, and stop using the visa system as a way to avoid training anyone. Fourth, go after participation before immigration, with childcare, occupational health and a welfare system that rewards work, because every inactive person brought back into employment is growth the housing market never feels. Fifth, measure the right thing. Make GDP per head, not GDP, the number the government is judged on. You manage what you measure, and we have spent years measuring the flattering one.
For Malta the logic is the same on a smaller canvas. Stop competing on the sheer volume of cheap labour and start competing on output per worker. Choose the handful of sectors where a small, skilled, well-governed state can credibly lead, and let the low-margin, high-headcount model taper rather than expand.
One caveat, because it is the kind I insist on. I am not arguing for zero migration. A care system, a health service and a construction sector that need people now cannot wait a decade for a training pipeline, and pretending otherwise is its own dishonesty. Targeted, skill-led migration is part of any serious answer. The argument is narrower, and I think harder to dodge: migration should be the supplement to a productivity strategy, not the substitute for one. For years, both Britain and Malta have used it as the substitute.
So in the end the choice is between two kinds of growth. One is borrowed. It flatters the headline, arrives quickly, and quietly passes the bill to the housing market, the public services and the next government. The other is earned. It is slower, it demands investment and reform that no minister enjoys, and it shows up in the one number that tracks whether people's lives are getting better. We have spent twenty years choosing the first. The honest case for the second is not that it is easy. It is that it is the only kind that lasts.
Questions readers ask
Does immigration increase GDP per person? Adding workers reliably raises total GDP, but its effect on GDP per person is much smaller and more uncertain. In the UK, total output kept growing through the high-migration years while real GDP per head grew just 0.1% in 2024 and was still about 1% below its end-2019 level. The economy got bigger; the average person barely did.
What can replace immigration-led growth? Three things, and only three: higher productivity through more investment and better tools per worker, higher participation by bringing the economically inactive already here into work, and sustained investment in skills, infrastructure and a planning system that lets things get built. Each is a real alternative, and each is slower than issuing a visa.
Why don't governments just do this? Because it is slow and politically costly. Productivity gains take a decade to compound, investment needs a stability governments rarely give, and reforms to planning, welfare and skills create loud losers now for diffuse winners later, usually after the electoral cycle.
Sources: Office for National Statistics, long-term international migration estimates, and the Migration Observatory, University of Oxford, on UK net migration and its 2023 peak and subsequent fall; Office for Budget Responsibility, Economic and Fiscal Outlook (March 2025), and the Institute for Fiscal Studies, on GDP per head; The Productivity Institute and LSE British Politics and Policy, on UK output-per-hour growth; IPPR, on UK business investment as a share of GDP and the capital gap versus G7 peers; National Statistics Office (Malta) on population and the labour force, with reporting by The Malta Independent and The Shift News on foreign workers; World Bank and Central Bank of Malta on GDP per head. All figures are official estimates and subject to revision.