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{{The European Union is underpinned by the so-called “four freedoms”: the free movement of goods, services, capital and people. There’s little controversy over the first three.

But the free movement of people has become a hot political issue in many countries, often whipped up by nationalist parties. Some people who want to keep immigrants out are racists.

There are also two supposed arguments for keeping foreigners out: that they take both “our jobs” and “our benefits”.}}

Immigration is a particularly live issue in the UK. In the European Commission’s latest Eurobarometer survey, 32 percent of the British people questioned thought it was one of the two most important issues facing the country. The average for the EU as a whole was 10 percent.

In a poll for The Independent last month, two-thirds of those questioned thought British firms should give UK citizens priority over other candidates from elsewhere in Europe when hiring new workers – even if this meant Britain had to leave the EU. Just 16 percent disagreed. The UK Independence Party, which wants Britain to quit the EU, has heightened anxiety by arguing that there will be a wave of immigrants from Romania and Bulgaria after the last restrictions on their citizens’ movements are lifted at the end of this year.

The free movement of people is one of the EU’s biggest pluses. And the number of EU citizens who engage in so-called “welfare tourism” – travelling to other countries to live off benefits – is exaggerated. However, it has become such a hot potato that it would be wise to tighten up the EU’s rules on immigrants’ access benefits. This is especially so in the UK, where David Cameron suggested last week in an interview with The Times that doing so could help sway a planned referendum on whether to stay in the EU.

First, though, look at the facts. Eight Eastern European countries, led by Poland, the so-called “A8” countries, joined the EU in 2004. A wave of migrants left for richer countries, especially the UK which didn’t impose any temporary restrictions. This was beneficial for the economy because most of the immigrants were skilled and hard-working. Most weren’t so young that the state needed to pay for their education or so old that it had to pay much for their healthcare.

The A8 immigrants are 59 percent less likely than natives to receive state benefits or tax credits and 57 percent less likely to live in social housing, according to a 2010 study by the Institute of Fiscal Studies. They also make a positive contribution to the public finances – unlike the native population which consumes more in benefits than it pays in taxes.

Although the Eastern European immigrants also have a lower unemployment rate than the natives, they don’t seem to be taking British jobs either. In some cases, they have been doing jobs that local people don’t want to do such as farming.

Between 1997 and 2011, the UK created 3 million jobs. But British citizens have often lacked the skills and incentives to grab these opportunities. Immigration from the rest of the EU and further afield has filled the gap. Between 2008 and 2011, during the worst of the recession when unemployment rose by 1.1 million, the employment of Eastern Europeans in the UK rose by only around 100,000, according to Open Europe, a free-market think-tank. So EU immigration can, at the most, have been responsible for a minor part of the increased unemployment.

In fact, the arrival of skilled hard-working immigrants has probably been good for jobs. This is because it has improved the competitiveness of British-based businesses so helped them expand and because the Eastern Europeans themselves have spent money in Britain.

{{So much for the facts. What about policy?}}

The key EU law is the so-called Free Movement Directive. This doesn’t oblige a country to provide “social assistance” (things like housing benefit) to foreign nationals during their first three months – or if their only reason for staying after three months is because they are looking for a job. Unfortunately, there is another EU regulation that covers “social security benefits” (things like unemployment benefit). These benefits have to be offered to all EU citizens who are “habitually resident” in a country without discrimination.

The basic principle should be that people are free to move around the EU to work, study or retire but not to live off benefits. One way of achieving this objective, advocated by Open Europe, is as follows: only people who are self-sufficient or in work should have the right to live in another EU country, unless they have already been working there for a period; and only those who have the right to live in another EU country should have the right to get benefits. People could still go to another country to look for work but they wouldn’t have the right to any benefits during that period.

Though the UK is the country most exercised by this issue, it is not alone. Two years ago, 13 countries, including Germany, called for further discussion on the interaction between the principle of free movement and access to benefits. This year, the Dutch government said it was necessary to combat “the abuse of social security systems.”

Welfare tourism isn’t a big economic problem. But it is a political problem which could ultimately become a big economic one if it helped trigger Britain’s exit from the EU. Tightening up the rules is a priority.

{wirestory}

{{The U.S. government tapped into computer networks of companies including Google Inc. and Brazilian state-run oil firm Petroleo Brasileiro SA, according to leaked U.S. documents aired by Globo, Brazil’s biggest television network.}}

A week after it broadcast a report that the U.S. National Security Agency spied on the presidents of Brazil and Mexico, Globo said the agency had also spied on major companies.

It showed slides from an NSA presentation, dated May 2012, that it said was used to show new agents how to spy on private computer networks.

In addition to Google and Petrobras the presentation suggested the NSA had tapped into systems operated by France’s foreign ministry and the Society for Worldwide Interbank Financial Telecommunication, an international bank cooperative known as Swift, through which many international financial transactions take place.

The report did not say when the alleged spying took place, what data might have been gathered or what exactly the agency may have been seeking.

As with its previous report, Globo disclosed the information in coordination with Glenn Greenwald, an American blogger and journalist for the Guardian newspaper, who has worked with former NSA analyst Edward Snowden to expose the extent of U.S. spying at home and abroad.

During an interview in the Globo broadcast, Greenwald said the documents he obtained from Snowden contain “much more information on spying on innocents, against people who have nothing to do with terrorism, or on industrial issues, which need to be made public.”

In an email exchange with Reuters, Greenwald declined to discuss the report further.

Petrobras, which has made some of the world’s biggest oil finds in recent years, did not respond to requests for comment on Sunday. Spokespeople for Swift and Google couldn’t be reached for comment. Officials at the French embassy in Brazil also could not be reached.

{wirestory}

{{Muted inflation data on Monday added to a run of August figures suggesting the protracted slowdown in China’s economy may be bottoming out, helped by targeted support measures and signs of improved export demand.}}

A steady consumer inflation rate also gives the People’s Bank of China some room to maneuver in response to any shock that might arise as the U.S. Federal Reserve starts to taper its monetary stimulus.

However, any sharp policy shifts in the world’s second-largest economy seem unlikely amid concerns about rising property prices and after efforts to curtail unregulated lending.

“There is no sign of any shift in monetary policy,” said Jerry Hu, an economist at Shanghai Securities, who saw stable consumer prices in the months ahead.

“I think monetary conditions will become tighter, probably through a combination of quantitative tightening and low interest rates.”

Consumer prices rose 2.6 percent in August from a year earlier, the National Bureau of Statistics said, in line with market expectations and July’s 2.7 percent rise. Month-on-month, prices were up 0.5 percent, slightly stronger than a forecast rise of 0.4 percent.

Producer prices fell an annual 1.6 percent, less than both a market forecast of 1.8 percent and a fall of 2.3 percent in July. While factory-gate deflation has now lasted for 18 months, the pace of decline has steadily eased from a peak of 3.6 percent in September 2012.

“The trend of stabilization in the economy is becoming clearer,” Yu Qiumei, a senior statistician at the bureau, said in a statement.

There are increasing signs that China’s economy is finding its feet after slowing in nine of the past 10 quarters, with other data already out for August showing some strength.

Exports rose more than expected, helped by improving demand in major markets, and manufacturing surveys suggested capital spending and industrial output have gathered steam in response to government steps to spur investment and promises to push through reforms.

As recently as a month ago, investors had worried that China was slipping into a deeper-than-expected downturn, especially after its money market was hit by an unprecedented cash crunch in June as the central bank sought to curtail credit growth.

But policymakers have stepped in with a series of measures aimed at stabilizing the economy, including quickening railway investment and public housing construction and introducing policies to help smaller companies with financing needs.

Data for industrial output, fixed asset and retail sales come on Tuesday is expected to increase confidence a sharp slowdown has been avoided.

Vice Finance Minister Zhu Guangyao has said there was no need for government stimulus and growth could instead be supported through structural adjustments.

For its part, the central bank has kept policy stable since the start of this year, with some fine-tuning to support the slowing economy while heading off inflation risks.

For now, a major uncertainty is how investors will respond if the U.S. Federal Reserve does begin trimming its stimulus later this month. Some see a risk that a clutch of big developing economies are vulnerable to capital outflows.

“Given the weekend trade performance, we think China’s economy is stabilizing, but a sustained upside trend is still uncertain,” said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai.

“The moderation in August imports reflected still weak domestic demand, and we should not underestimate the impact of tapering of U.S. monetary stimulus.”

Officials have been optimistic about growth, saying there are clear signs of stabilization and that the annual GDP target of 7.5 percent — a two-decade low — is achievable.

reuters