Immigration has allowed the economy to grow faster with lower inflation, a report by Ernst and Young has said.

The Ernst and Young Item Club also said the UK would grow by 3% a year if immigration continued to rise at the same rate as in the past two years. The report said foreign workers appear to have filled about two-thirds of new UK jobs between 2002 and 2006. But they also may have made it tricky for UK youngsters to get entry level jobs.

The Item Club estimates 1.5 million immigrants have arrived since 1997. Professor Peter Spencer, chief economic adviser to the ITEM Club, said immigration has helped push up productivity and helped “keep a lid” on inflation.

However, the report also points out that the growth of immigration may have also increased unemployment among young UK workers. "Given the age and skill profile of many of the new immigrants, it is possible that 'native' youngsters may have been losing out in the battle for entry-level jobs," it said.