Britain, the migration nation
Brexit has had a surprising effect on levels of migration.
The UK has been a major net “importer” of people since the 1990s, with immigration running well ahead of emigration. The UK’s foreign-born workforce increased by an average of 5 per cent a year between 1998 and early 2020, roughly ten times the annual growth rate in the UK-born workforce.
Brexit has had surprising results. Much-reduced levels of migration from the EU have been more than offset by rapid increases in migration from outside Europe. The net effect has been a sharp increase in net migration, reaching a record 906,000 in the year to June 2023. An easing of visa rules for non-EU workers and students, the effects of the pandemic and global events have all played a role.
The post-pandemic recovery was marked by rising labour shortages, especially in health and social care. This coincided with a post-Brexit overhaul of the immigration system that led to a tightening of rules for EU-nationals and an easing of visa restrictions for people outside the EU. The result was a marked increase in migration by workers from outside Europe, many of them into health and social care.
Student numbers also rebounded, reflecting a catch-up after a pandemic lull and the effect of a 2021 rule change which made it easier for foreign students to stay and work in the UK after graduation. The UK also eased travel restrictions more quickly than in competitor markets such as Australia and Canada, adding to the attractions of the UK. An additional factor was a seven-fold increase, to 136,000 in 2022, in the number of overseas residents moving to the UK as dependents of students.
World events played a role too. In the wake of the invasion of Ukraine, the UK introduced a special visa to allow entry for Ukrainians, with the number of people entering peaking in May 2022. Amid further restrictions and controls imposed by the Beijing government in Hong Kong more residents there also chose to leave for the UK.
The then Conservative government, having presided over a loosening of visa requirements for non-EU nationals and students, abruptly reversed course as the scale of the increase in migration in 2022-23 became clear. Changes introduced in 2024 set higher salary thresholds for work visas and restrictions on care workers and most students bringing dependents to the UK. The impact of these decisions is evident in the data which show big drops in work and study-related immigration, especially among student dependents.
Net migration halved in 2023-24. This decline is perhaps less dramatic than it seems given that it followed a record year and left net migration running well above pre-Brexit levels.
Long-term immigration trends reflect the interplay between policy choices and external factors over which the government has little or no influence. In the last 25 years successive governments have played a role, partly through easing visa requirements, starting with the Labour government in the 1990s, but also by drawing on overseas labour for the NHS and social care and increasing foreign student numbers. The UK, unlike most other EU countries, put no controls on migration from the new EU member states in central and eastern Europe after 2004, resulting in a large increase in migration from countries including Poland, Romania and Hungary. Geopolitical events and humanitarian crises, such as the wars in Afghanistan and Iraq and the conflict in Syria, also added to population flows.
All countries have struggled to control immigration. Yet, as the UK experience shows, policy matters. Easier migration rules explain much of the increase in migration in the last 25 years and, especially, in the wake of the UK’s departure from the EU. Restrictions, predictably, have the opposite effect, as illustrated by the halving of migration in 2023-24. It is worth noting that while the rhetoric of most politicians in the last 25 years has been about managed or more limited migration, policy has often operated, for all sorts of reasons, in the opposite direction.
Levels of migration have some economic impact, and generally tend to boost GDP growth (though not necessarily growth in GDP per head). But of greater importance is the composition and nature of immigration, so whether migrants work, their skills and earnings. These are the key factors in determining the effect of migration on productivity, tax revenues and the welfare of the wider population. Higher skilled, higher paid migrants contribute disproportionately in these areas.
The UK policy discussion on migration has ebbed and flowed over the years. The focus now seems to be on lower, more highly skilled migration. This can help growth, but it is no silver bullet. Productivity and participation rates within the existing UK workforce remain the key drivers of living standards.
A personal view from Ian Stewart, Deloitte's Chief Economist in the UK. Subscribe and/or view previous editions of the Deloitte Monday Briefing here.
Two points:
1. Thank you for a thoughtful analysis of the competing and complex factors influencing the rise in migration into this country over the past thirty years. Unfortunately, as is true in most political discourse (and even more so in publications' comments sections ), little thought but much fulmination is given to this issue. the assumption is always that malign actors are trying to destroy the country and that a magic wand can be waved and it all can be ended/reversed. Neither is true.
2. The UK has been exceptionally open to both economic- and humanitarian-based immigration. the consequences are, as you state that "[t]he UK’s foreign-born workforce increased by an average of 5 per cent a year between 1998 and early 2020, roughly ten times the annual growth rate in the UK-born workforce." It surely is equally valid that we should take steps to, at the very least, pause large-scale immigration, until its effects have been both understood and steps take to integrate (or "re-immigrate") the migrant population.