London is more at risk from a sudden drop in EU migration than any other city

Abigail Morris
Lord Mayor's Hot Air Balloon Regatta
The capital is at risk from a sudden drop in EU migration (Source: Getty)

London is most vulnerable to lower future net migration from the EU after Brexit, a PricewaterhouseCoopers (PwC) report has found.

The capital has the highest proportion of European Economic Area (EEA) workers in the UK at 14 per cent compared to around seven per cent of total UK employment.

Halving net migration from the EU could have a disproportionate effect on certain industry sectors and regions, economic modelling by PwC of a recently published alternative population scenario from the Office for National Statistics found.

The sectors most reliant on EEA workers include food manufacturing, construction, hotels and restaurants and warehousing.

London’s construction sector could be particularly hard hit by reduced EU migration: 30 per cent of construction workers in London were EEA migrants in 2016, while a fifth of UK-born construction workers in the capital are due to retire in the next five years.

John Hawksworth, chief economist at PwC, said: “By identifying the industries and areas that could be worst affected, the government can make informed decisions on post-Brexit migration policy and target their support accordingly.”

PwC also found that halving net migration from the EU could reduce average UK GDP per capita by around £60 per person in 2030.

The impact is “negative, but relatively small compared to the many other uncertainties about average UK income levels in 2030,“ Hawksworth said.

In 2016, around 30 per cent of EEA workers were identified as high skilled the report found, including critical workers in sectors such as medicine, academia, technology, financial and professional services.

“Curbing recruitment of high skilled workers from the EEA could have particularly negative implications for longer term productivity and the UK’s international competitiveness,” Hawksworth said.

Closing skills gaps left by lower future net migration from the EU with enhanced training of UK nationals and automation will be key to improving UK productivity, but this will take time.

“Businesses from all sectors have voiced concern over restrictions to EU migration,” said Julia Onslow-Cole, global head of immigration at PwC and a member of the mayor of London’s Brexit expert advisory panel.

She added: “It’s important that not only do we take steps to retain the EU migrants already living in the UK, but make special provisions for them in the new immigration system post 2021.”

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