Nigel Farage is pushing for a net zero migration policy, but what would this mean for the British economy? Employers are worried and politicians from all sides are promising changes to immigration. With the number of job vacancies already higher than unemployed individuals, the UK may face challenges in maintaining its economic stability.
Official figures reveal a troubling reality: the number of job vacancies in the UK surpassed the number of unemployed people available to fill them as recently as the summer of 2022. An improving economy could repeat this scenario. Businesses heavily depend on immigration to function, but by how much?
Madeleine Sumption, director of the Migration Observatory at the University of Oxford, explains that quantifying the costs and benefits of immigration is complex. Different types of immigration have diverse economic impacts. For instance, Ukrainian refugees may not have a net positive impact, while work visas are more financially beneficial. Recently raised salary thresholds indicate that most private-sector roles would contribute positively to public finances.
Certain critical sectors like hospitality are particularly reliant on migrant workers. UK Hospitality notes that while 75% of the industry’s workforce is British, the remaining 25% is from overseas—and this percentage is higher in London. Kate Nicholls of UK Hospitality warns against arbitrary migration policy changes that disregard economic realities, advocating instead for a balanced employment plan.
Similarly, the construction industry faces severe labour and skills shortages worsened by an ageing workforce and EU staff returning home. Liz Drummond from the Construction Industry Council argues that limiting skilled immigration without a robust upskilling plan could harm economic growth, especially in key sectors.
Recent migration figures indicate a significant reduction in net migration: from 685,000 in the year to December 2023, a 10% drop from the previous year but still historically high. With these numbers, Labour and Conservative parties promise to reduce migration, though without specific targets. Only Farage aims for zero net migration, tying new visas to the number of people leaving the country.
Matthew Percival from the Confederation of British Industry calls for an honest conversation about immigration. Restricting visas won’t spur growth or public services; instead, investment in technology, innovation, and skills is essential, alongside measures to bring more people back to work.
The UK’s productivity lag behind countries like the US and Germany shows the potential for improvement. Boosting productivity requires substantial investment in skills and training, which business leaders agree on. Telecoms billionaire John Caudwell criticises the Conservative party’s poor investment record and urges Labour to be bold in their economic strategies.
Another approach to reduce reliance on overseas labour is better utilisation of the domestic workforce. High economic inactivity—students, carers, retirees, and those hindered by health issues—reflects untapped potential. Despite government efforts like expanding the ‘fit note’ programme, the labour market remains unfriendly for many, particularly disabled individuals.
Director of strategy at disability charity Scope, James Taylor, highlights the persistent employment gap for disabled people, blaming employer attitudes, lack of flexibility, and inadequate support. Proposed welfare system changes that force unsuitable jobs upon disabled individuals also draw criticism.
Tony Wilson from the Institute for Employment Studies advocates for a supportive labour market focused on helping people find better work and building meaningful partnerships. Even with productivity improvements, the UK will still need immigration, especially in sectors like healthcare and social care.
As Unison’s general secretary Christina McAnea states, the UK remains reliant on overseas staff until domestic health and care workers are sufficiently numerous and well-paid. Any reduction in immigration without addressing these points would spell bad news for public services. The incoming government, regardless of political affiliation, will need to face this hard reality after the election rhetoric subsides.
Britain’s economic stability hinges on how effectively immigration and domestic workforce issues are managed. With critical sectors reliant on migrant workers, sweeping changes to immigration policies could lead to significant economic challenges. Policymakers must balance the need for controlled immigration with the reality of labour shortages and the necessity for economic growth.