Brexit Curbs Freedom of Movement: What’s the Economic Impact?

For years, people in the UK have been fed a steady stream of media stories and statements by politicians regarding the dangers of unrestricted migration. So much so that most people believe migration from the EU into the UK is the source of all their woes. The result? Britain decided to leave the EU in 2016 and now gazes into at an uncertain future, both socially and economically.

What UK citizens should have known is that 44% of citizens in the EU have some form of higher education, compared to 23% of UK nationals, according to a report by the London School of Economics and Political Sciences. This has given UK companies the ability to hire more skilled workers than the other states. OECD has gathered data that proves that immigrants from the EU have boosted England’s GDP growth. Migrants from the ten central and eastern European countries that became a part of the EU between 2004 and 2007 made a net contribution of over £5 billion to UK’s economy between 2008 and 2018, according to a study by Warwick Business School.

In complete ignorance of these facts, erstwhile UK Prime Minister Theresa May chose Brexit as a way of cracking down on immigration, with the promise to “take back control”. Curbing free movement of people between these regions will most likely prove to be a huge mistake, and UK stands to pay a hefty price for this decision.

Woes Begin Where Freedom of Movement Ends

So, what will be the impact of Brexit? Curbing freedom of movement of labor between the EU and the UK will create a massive shortage of workers, particularly in South-East England. A large portion of UK businesses will be cut off from access to a till-now limitless pool of more affordable labor.

London will be the worst hit, as 35% of all migrants in the UK stay this city. It would be difficult for skilled and unskilled labor from other parts of the country (like Northern England, Northern Ireland, Scotland and Wales) to replace this population due to the high cost of living in London. Businesses will come under immense pressure to invest heavily in training and development of workers, with barriers to movement of labor creating problems of replacing EU skilled workers.

Some may argue that a market can function without free movement of workers across borders, as long as capital and goods and services are free to flow. This theory ignores several aspects of freedom. Immigrants bring with them knowledge of markets. Businesses hiring these workers got access to this knowledge. With barriers in place, businesses will need to pay for surveys or resort to experimenting with what will work in those markets. For years, immigrants have been the economic bridges between countries, facilitating growth of trade and investments, especially in services.

All UK citizens who think that EU migrants are putting a burden on public services and encroaching upon their employment opportunities should first consider these statistics. EU immigrants who settled in the UK since 2000 contributed £20 billion to public infrastructure between 2001 and 2011, according to research conducted by the UCL Centre for Research and Analysis of Migration. Immigrants have launched businesses, created jobs and kept public services going.

The impact of closing borders not only has economic repercussions, but also social and cultural consequences. Both these regions form the essential ingredients of each other’s music, arts, food and sports. More than a million Brits today can travel freely across the European mainland and have the rights to live and work there. Brexit might end all such opportunities for both UK and EU citizens.