Brexit immigration curbs have led to a shortfall of 330,000 workers in the UK, contributing to a tighter labor market and fueling inflation, a report showed.
(Bloomberg) — Brexit immigration curbs have led to a shortfall of 330,000 workers in the UK, contributing to a tighter labor market and fueling inflation, a report showed.
Low-skilled sectors including retail and hospitality have been hit hardest by the end of freedom of movement following the UK’s departure from the European Union, an analysis by the Centre for European Reform found.
The figures are the latest to show the costs of Brexit to the UK economy. While Prime Minister Rishi Sunak’s Conservative government pushed for exiting the EU, it’s now struggling to contain the economic fallout of the decision.
The UK government vowed to clampdown on the supply of cheap labor from Europe when it introduced a new post-Brexit immigration system.
Britain has lost about 1% of its workforce due to the impact of Brexit, according to economists John Springford and Jonathan Portes at the research group. While that led to a 130,000 boost in non-EU workers by June 2022 compared to a scenario where immigration controls were not changed post-Brexit, it was wiped out by 460,000 fewer workers from the EU, the economists said.
Workers shortages have helped to fuel the strongest UK wage growth outside of the pandemic, creating more headaches for the Bank of England as it battles painfully high inflation. The CER said the biggest shortfalls of non-EU workers were found in the transportation and storage, retail and hospitality sectors.
“The conditions of the new system, while liberal, are too onerous to compensate for the loss of free movement in low-skilled sectors of the economy, which has led to labor shortages,” said Springford and Portes. “Some combination of higher wages and prices and less output is likely, especially in work that is hard to automate.”
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