UK immigration restrictions, which were imposed after leaving the European Union, resulted in a shortage of 330,000 workers in the country. Sectors with a low-skilled workforce, such as retail, hospitality, transport and warehousing, have been hit particularly hard by the end of free movement of people between the UK and the EU, according to a report by the London-based think tank Center for European Reform (CER).
The UK has lost about 1% of its workforce due to the impact of Brexit, according to economists at the think tank. Although leaving the EU resulted in an increase of 130,000 non-EU workers, stricter immigration rules reduced the number of workers coming from the EU by about 460,000, the economists said.
The British government promised to curb the supply of cheap labor from Europe when it introduced a new post-Brexit immigration system. At the time, the Conservative Party, led by incumbent Prime Minister Rishi Sunak, lobbied to leave the European Union, but the current government is now struggling to deal with the economic repercussions of this decision.
Higher wages and prices
The labor shortage also contributes to strong wage growth in the UK, which makes it difficult for the Bank of England to fight inflation. “There is likely to be a combination of higher wages and prices and less production, especially in work that is difficult to automate,” CER economists warn.
Inflation accompanied by economic recession
Britain’s largest employers’ organisation, the CBI, called on the government in November last year to accept more skilled migrant workers to tackle the country’s economic problems. According to the organization, labor shortages lead to more stagflation. This is a situation where high inflation slows economic growth, and unemployment remains high.
Eastern Europe
The NFU, the British Farmers Trade Confederation, has also called on the government to be flexible with visa rules for foreign workers. Because of leaving the European Union, many workers, especially from Eastern Europe, have returned home and British agriculture is highly dependent on foreign workers.
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