Britain’s economy faces a potential skills shortage as new official figures show a surge in EU migrants leaving the country in the year of the Brexit vote.
Business groups warned that a sharp fall in net migration last year, driven by a dramatic increase in EU nationals fleeing the UK, meant employers risk “losing key members of staff in positions that cannot easily be replaced”.
The Office for National Statistics estimated long-term net migration to be 248,000 in 2016, down a “statistically significant” 84,000 from 2015.
The net change was driven by a big increase in EU citizens leaving the country as well as a smaller fall in people coming to the UK.
The ONS says around 117,000 EU citizens left the UK in 2016, an increase of 31,000 on 2015 and the highest recorded estimate since 2009.
Those who left were mostly EU8 citizens – a group which includes citizens of Poland, the Czech Republic, the Baltics and Hungary.
Notably, the number of people moving to the UK to study at its universities also fell by 32,000 to 136,000.
The Government has repeatedly refused to confirm whether EU citizens will have a right to stay in the UK after Brexit negotiations despite calls to do so. The exodus could also be driven by a sharp recorded increase in anti-foreigner hate crimes since the European Union referendum. Police figures showing increases are concentrated in areas that voted mostly strongly to leave the UK.
EU migrants contributed around £20bn to the UK’s public finances between 2000 and 2011, and paid billions more in taxes than they received in welfare payments.
Seamus Nevin, head of employment and skills policy at the Institute of Directors, said: “Today’s migration figures underline the importance of immigration to the UK workforce and are a warning of the damage a significant reduction could do. Alarmingly, the fall in net migration is being driven as much by people leaving as by fewer arriving. This is a big worry for employers who risk losing key members of staff in positions that cannot easily be replaced from the home-grown pool available. The IoD has repeatedly called for the government to guarantee the status of EU migrants already living here. Doing so would allow businesses to start planning for the future.
“There is a well expressed public desire for increased control of immigration but all parties in the general election should set out clearly the costs of any proposals they make. The Office for Budget Responsibility have calculated that cutting immigration to the “tens of thousands” would add £6bn a year to the national deficit, just in terms of the direct reduction in the taxes collected and so not including wider economic impacts.
“The next government must also set out a plan for a new immigration system which doesn’t disrupt the dominant services sector of our economy. Trade isn’t just about goods being sold, services exports require people to be able to travel for business. Services comprise roughly 80 per cent of UK employment and almost half of our exports, so a reduction in this area could lead to job losses and a considerable adjustment for the UK economy. Our migration system will play a central part in shaping ‘Global Britain’s’ future trading relationship, not only with the EU, but also with the rest of the world.”
Stephen Clarke, Economic Analyst at the Resolution Foundation, said: “The sharp fall in migration since the referendum shows that British businesses need to start preparing now for a big shift in the labour market, even before we leave the EU.
“Rising emigration among EU nationals, particularly from Eastern Europe, means that many firms would be wise to rethink their investment, recruitment and training policies.
“What businesses also need during this election campaign is far more clarity from political parties about what their post-Brexit migration policy will be. The choices we make about post-Brexit Britain’s approach to migration will mean a fundamental shift in the way many run their business – the time to start preparing for that is now.”
Despite the fall, net migration is still far above the Government’s target of 100,000, which David Cameron committed to in 2010 and re-iterated in 2015.
Theresa May has re-iterated the pledge in her party’s 2017 manifesto but not explained how it will be achieved; the Government has refused to give specifics on its plans for what the immigration system will look like after leaving the EU.
The fall should also be seen in the context of net migration reaching a record high at the end of 2016.
Different migrants appear to be dealing with the uncertainty caused by the Brexit vote in different ways, however.
Separate figures show there was a 103,000 surge in EU nationals applying for permanent residence in Britain in first three months of this year, up from 77,000 last year.