What does leaving the EU mean for how immigration affects the economy?

This briefing is largely based on the briefing by the House of Commons Library ‘EU referendum: impact of an EU exit in key UK policy areas’. The opinions and judgements it contains are theirs. We expect to review and add to these articles periodically as events develop.

The effect of immigration on the labour market is one of four areas where the economic impact of leaving the EU will be most obvious, according to the House of Commons Library.

Whether or not the UK will retain free movement of people with the EU will depend on the outcome of UK-EU negotiations, and what the government chooses to push for in those negotiations.

If we want to access the EU’s single market then the EU might say it only agrees to this if we continue to accept the free movement of people from the EU.

If the UK does not continue with the free movement of people and extended current rules for non-EU citizens to all non-UK nationals then this would reduce the numbers of low-skilled migrant workers coming in, and restrict people coming here for work to mostly high-skilled migrants. At the moment non-EU migration is mostly restricted to high-skilled workers.

The London Chamber of Commerce and Industry has previously warned of the possibility of labour shortages in such a scenario:

“Such an approach could lead to a shortage of low- and high- skilled workers that a lot of businesses are dependent on, affecting the economy and businesses’ ability to trade both nationally and internationally.”

Sectors with higher proportions of EU migrants work are likely to be more affected by this in the long term. Even if existing workers stay it would affect how many new EU migrants sectors could employ in the future.

The sectors with the highest proportion of workers born in other EU countries are the hotel and food industry (13% in July-September 2014), manufacturing (11%), and admin and support services (10%). Parts of the economy with the lowest share of EU workers are the sectors linked to the public sector, including public administration and defence (3%), education (5%), and health and social work (6%).

It will also differ by region—London, with its relatively high concentration of workers from the rest of the EU, is more likely to be affected than areas with low shares of EU workers.

There’s lots of research available on the impact of immigration on the economy.

Read the following articles for more information:

• How immigrants affect jobs and wages
• EU immigration and pressure on the NHS
• Impacts of migration on local public services

The House of Commons library briefing also has more information.