The Potential Cost of Brexit
The potential impact to our economy of preventing immigration could be more pronounced than the economic impact of trade concerns. We saw the pound devalue significantly after Theresa May announced that we would be leaving the EU single market.
Last year figures show just under 300,000 in net migration, split fairly evenly between EU and non-EU members. This has increased in the last 10 years since new EU members gained the right to move to Britain. In 1995, net migration was under 100,000! Half of the EU nationals emigrating to Britain take less skilled jobs, some firms are reliant on these workers. From the Brexit white paper, we can see that the targets for net migration are to be reduced to the 10s of thousands; encouraging “the brightest and the best to come to this country”. By reducing the supply of unskilled workers Brexiteers hope to increase productivity in Britain, firms will have to introduce labour-saving technology; they also hope Britain’s will see less competition for jobs and should see higher wages.
However, economist counter this argument by saying that any wage increases will be imperceptible (0.2-0.8% by 2018). They also suggest that there will be a slowdown in the wider economy, research from Strathclyde University reveals that net migration of 100,000 would lower GDP by 1% per person and the largest impact would be seen to public finance. This is due to the fact that Britain has an aging population and a high dependency ratio, this is driving up spending on health care and pensions. Britain really needs these immigrants to improve the dependency ratio, balancing the retired population with those of working age, paying tax.