Britain’s economy could lose $29 billion if EU migration halves post-Brexit

If EU leave me now, you’ll take away the biggest part of me.
If EU leave me now, you’ll take away the biggest part of me.
Image: Reuters/Bogdan Cristel
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One of the biggest issues for Brexit’s “leave” voters was a fear of immigration. Now the UK government is aiming to reduce EU migration into Britain—drastically.

Brexit talks have yet to include whether the UK will still take part in the Freedom of Movement act, which allows EU citizens free and easy passage between member states. Net migration is already falling, but the lack of clarity over what a post-Brexit UK immigration policy looks like is causing a huge level of uncertainty for people, industries, and the economy.

In its latest UK Economic Outlook, consulting giant PwC used economic modeling to predict the impact of a sharp reduction in EU migration. It found that a 50% reduction in future EU migration to the UK could reduce the level of UK GDP by around 1.1% in 2030, or £22 billion ($29 billion) at 2017 GDP values.

“EU migrants have played an increasingly important role in the UK economy since 2004, with particularly large impacts on London and certain sectors such as food manufacturing, hotels and restaurants, warehousing, and construction,” PwC wrote. (Quartz has also noted the role played by lower-skilled EU migrants in Britain’s services sector, which accounts for around 80% of total GDP.)

In 2016, according to PwC, workers from the European Economic Area accounted for 31% of the UK’s food-manufacturing workforce, while also accounting for a large chunk of other service-industry sectors: accommodation (18%), warehousing (17%), food and beverage services (13%), and construction (10%). Overall, EEA workers account for 7% of total UK employment, though some regions (like London) account for much larger portions, and could be all the more affected by a workforce gulf. 

“If migration from the EU is significantly reduced after Brexit, then government and businesses will need to work together to try and fill the gaps,” says Julia Onslow-Cole,  global head of immigration at PwC and a member of the Mayor of London’s Brexit expert advisory panel. “While enhanced training of UK nationals and automation might be a solution in certain sectors if we look 10-20 years ahead, realistically they’re unlikely to make up fully for any large reduction in EU migrant workers over the next 5-10 years.

“Businesses from all sectors have voiced concern over restrictions to EU migration, but healthcare, hospitality, retail, and construction are particularly dependent on EU workers. It’s important that not only do we take steps to retain the EU migrants already living in the UK, but make special provisions for them in the new immigration system post 2021.”