Weaker pound expected to reduce immigration

Immigration to the UK may fall from its near record high in 2016 as the weakness of sterling, anti-immigrant rhetoric and uncertainty about the future makes the UK a less attractive destination for EU migrants, economists predict in the FT’s annual survey.

Net migration to the UK was at a near record level of 335,000 in the year to June 2016. Economists expect migration to remain high in 2017 but, on balance, predict a small fall.

There could be an incentive for migrants from the EU to try to come to the UK this year before tighter controls are imposed after Brexit. But other factors, including the weakness of sterling and slower economic growth are predicted to deter new migrants.

There will be little scope for Theresa May to impose any additional controls on immigration this year. “Whatever the final Brexit deal, the UK will remain part of the EU [in 2017] and hence will have very little leeway to control immigration,” said Kathrin Muehlbronner, of Moody’s Investor Services.

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But other economic and global developments are likely to have an impact. Sterling has depreciated significantly over the past year and the UK economy is also expected to slow more sharply than other economies in the EU, reducing the pull of the UK. Companies may also be more cautious about hiring workers who may not have a permanent right to work in the UK.

“Reduced migration would reflect the weakening relative performance of the UK economy and the devaluation of potential earnings remissions since sterling’s midyear decline,” said Philip Rush, chief economist at Heteronomics.

“With unemployment now coming down elsewhere in Europe, the motivation for EU nationals to move to the UK should gradually fade so I suspect that net inward migration has already passed its peak,” said Andrew Goodwin, lead UK economist at Oxford Economics.

“There is some evidence that due to the rather less welcoming environment and fears about future status some Europeans are returning home,” said Vicky Pryce, chief economic adviser to the Centre for Economics and Business Research, a consultancy.

Of the 115 respondents who answered the question, 25 per cent thought net migration to the UK would be lower in 2017 than in 2016 and 25 per cent thought it would be about the same. Only 8 per cent said they expected an increase. The remaining 42 per cent did not give a specific prediction.

The government has not yet said whether EU citizens who are already in the UK will be granted a permanent right to remain after Brexit. But many people assume this will be the case, although no cut-off date has been given.

“It is quite feasible that EU immigration increases over the next year or two as entrants pre-empt new British controls,” said Philip Shaw, chief economist at Investec.

Other factors could also continue to spur migration to the UK. “Conflict and environmental degradation show no sign of lessening,” said Andrew Simms, co-director of the New Weather Institute. “If anything [they are] growing worse,” he added, suggesting that migration from conflict and climate change-affected areas, particularly in Africa, could rise.

While the weaker currency makes the UK less attractive for workers, it makes it more attractive to students, lowering the cost of university fees. However, the government has been attempting to limit the number of foreign students, who count towards overall immigration figures.

“Higher education is one of Britain’s outstanding export industries, bringing in billions of pounds of foreign earnings every year,” said Martin Ellison, professor of economics at the University of Oxford. “Yet despite this the government seems determined to include students in the immigration count, which then creates incentives to make their arrival in the UK more difficult.”

Most respondents to the survey said immigration is good for the UK economy and any significant reduction would be detrimental. However, the impact of tighter controls on immigration would not be the same across the board.

Low skilled UK workers could benefit from wage rises if the number of low-skilled EU migrants were reduced. But Jonathan Portes, professor of economics and public policy at King’s College London, warned that any increases were likely to be “relatively modest”.

“One potential side effect of lower migration is the increased incentive it provides some firms with to make investments in new technology and in raising the productivity of their remaining workers,” said Matthew Whittaker, chief economist of the Resolution Foundation.

But substituting overseas workers with new technologies or better trained UK workers will be difficult in some industries.

“If the government does not agree some significant carveouts — seasonal agriculture, students, skilled engineers — some sectors of the economy will be torpedoed,” said Diane Coyle, professor of economics at Manchester University. “I have no idea which way the government will go on this.”

Full responses

Anonymous

I cling to the notion that the UK will chose an immigration regime that enables continued migration of labour that supports economic growth. What that looks like is anyone’s guess. In the near term, the slowing economy and the prospect of Brexit may slow migration somewhat in 2017.

Anonymous

The UK has been a massive beneficiary from cross-border, intra-EU immigration (and indeed from immigration from all over the world). Given the UK’s poor educational system (islands of excellence in a sea of mediocrity) and very poor vocational training, the inflow of skilled workers and high-tech talent from the EU-27 have boosted output, productivity and innovation in the UK as has created complementary employment opportunities for UK workers. The economy will be hurt badly by an end to free movement, even if the current stock of EU-27 residents in the UK gets grandfathered.

Howard Archer, chief European and uk economist, IHS Global Insight

It is pretty difficult to say what exactly the UK government will agree on with the EU in the long term. As for 2017, it is likely that nothing major will change. However, companies might be more cautious about employing EU citizens than before due to uncertainty about what will happen with these employees in the long term.

There will be a deal allowing EU citizens who currently reside in the UK to stay even after Brexit and the other way round. However, it remains unclear what the “cut-off point” will be for this arrangement and when we will see the implementation of a new(ish) migration policy

Angus Armstrong, director of macroeconomics, National Institute of Economic and Social Research

I expect immigration net inflows to fall from here. This is in line with a weaker economy but also reports of rising hostility to immigration. Maybe 50K lower net inflows next year. Impact on the economy will be weaker growth. Distributional impact is more nuanced as there is an income and substitution effect to consider.

Melanie Baker and Jacob Nell, UK economists, Morgan Stanley

Post Brexit, we expect the UK to tighten immigration controls to meet the government’s “tens of 1000s” target. That means curbing net migration by about two-thirds, shaving about 0.4pp off GDP growth pa.

Nicholas Barr, professor of public economics, London School of Economics

Immigration won’t change much in the short run — and probably not much in the medium term.

Ray Barrell, emeritus professor, Brunel University, National Institute of Economic and Social Research

Net Immigration has been increasing the UK population by 5 per cent per decade recently, and given we have a market economy and a degree of technical capacity this should also raise output by up to 5 per cent. The Brexit negotiations may reduce net immigration by around 40 per cent (or a 3 per cent population increase a decade) at best, but the impact on output growth may be greater. German, French, Dutch, Italian and Belgian migrants are at least productively equivalents of UK workers. Poles, Czechs, Slovaks, Spaniards and Portuguese are also able to integrate in to the market well. Those we choose not to exclude may increase production less than those who we do exclude. Perhaps we have the wrong answer to the right question, who comes here, why and how many. I highly commend Paul Collier’s book “Exodus” to anyone who wishes to understand the issues involved.

David Bell, professor of economics, University of Stirling

Net emigration is likely to fall next year, but perhaps not by much. The UK may be a somewhat less attractive destination to EU migrants, but push factors may increase as political and economic uncertainty increases elsewhere.

Marian Bell, former member of the MPC

I don’t know; there is still a lot to play for, but I fear the worst. Immigration, as globalisation, is beneficial in aggregate, but the advantages need to be articulated and policies put in place to compensate and assist the losers, otherwise, as we have seen, the political argument will be lost.

Andrew Benito, senior European economist, Goldman Sachs

We have assumed that expansion of the 16+ population slows from around 0.8 per cent a year in recent years to about 0.4 per cent in coming years, with the larger part of that owing to reduced inward immigration. A lower level of sterling will itself weaken the incentive for inward immigration regardless of what emerges in the Brexit negotiations. High levels of inward immigration have reflected and also reinforced the UK labour market’s high level of flexibility. Any immigration controls on EU migration — a “redline” for PM May in her Brexit negotiations — would make the UK labour market somewhat less contestable through the threat of inward immigration to contain wage pressures. Yet, with the level of real wage flexibility in the UK labour market quite high, and some modest additional slack emerging over the course of the next 1-2 years, we expect nominal wage growth to remain in the 2-2.5 per cent a year range, and real wage growth to be eroded by a pick-up in inflation, also owing to the weaker currency.

David Blanchflower, Bruce V. Rauner professor, Dartmouth College

A fall in migration would have very negative effects on the public finances and growth. East Europeans in particular have lowered the Nairu [non-accelerating inflation rate of unemployment] so reducing their numbers would make the Nairu higher. They also have much higher EPOPs [employment to population ratios] than the UK born. The evidence already though is with the decline in the pound and the anti-immigrant rhetoric their numbers have started to decline. My suspicion is nothing much will change as free movement is an issue the EU27 will not trade off. Reducing student numbers — who stupidly count as migrants but who are just temporary visitors and should be so classified — would hurt UK universities and is a huge mistake.

Nick Bosanquet, emeritus professor of health policy, Imperial College

Immigration will reduce anyway with lower growth and change in perspectives on longer term prospects. UK will come to be seen as a more hostile environment for EU job seekers. UK is a nation made by migrants — the reduction a great loss now and for future potential.

Ryan Bourne, former head of public policy, Institute of Economic Affairs

Totally depends on policy. I imagine the impact of the referendum result in itself will reduce migration flows even during the Article 50 period. But if the government announces a “cut off” for when EU citizens are able to say then we may see a temporary spike in reaction to that. Outside of the EU I fully expect policy to be less expansive at least to start, but in the longer term I expect this to be offset somewhat by free movement arrangements with other non-EU countries.

Francis Breedon, professor of economics and finance, Queen Mary University London

In the long term a fall in EU immigration (after 2017) — is likely to have a small negative impact on economic growth.

Alan Budd, former head of the Office for Budget Responsibility,

I believe that the most likely outcome will be some fall in immigration and that this will reduce potential growth.

Frances Cairncross, chair of court, Heriot-Watt University

As long as the UK economy is growing more strongly than most of the rest of Europe, it will be hard to make much dent in immigration — people from other parts of Europe have now got contacts in Britain and a good understanding of how the job market here works. However, if the government goes ahead with its current plans to cut back student visas, it will do the most damage to the academically weaker universities, many of which provide employment in regional towns and cities.

Jagjit Chadha, director, NIESR

The level of immigration seems likely to fall. European citizens will face a more uncertain future and their potential wages in euro terms are certainly less attractive. It will also take time for the government to establish new rules for entrants from outside the EU. So immigration of skilled labour seems set to fall and this may impact on growth in the short run but also provide an incentive for firms to invest in the human capital of domestic labour pool.

Alan Clarke, head of European fixed income strategy, Scotiabank

The sharp fall in the pound makes it less attractive for migrants to come to the UK, if they intend to send a proportion of their earnings back home afterwards. So for some, the pull factor to the UK has reduced / the push factor to return home has increased. That could see the net migration figures fall a little. The flipside is that if an EU migrant was thinking about coming to the UK, they may be minded to get in quick before the door slams shut and coming to the UK is no longer an option. Given these two offsetting influences, I would expect migration to be roughly the same next year.

David Cobham, professor of economics, Heriot-Watt University

I think it will change less than some people would think and would like, so the effect on the UK economy, at least over the next year or two, will be muted.

Diane Coyle, professor of economics, University of Manchester

Slower growth will reduce immigration anyway. If the government does not agree some significant carveouts — seasonal agriculture, students, skilled engineers — some sectors of the economy will be torpedoed. I have no idea which way the government will go on this.

Bronwyn Curtis, Society of Business Economists

I expect immigration to be lower than it has been in recent years whatever political decisions are made. It is difficult to judge just how much lower. There is a strong correlation between sectors highly dependent on immigrant labour and low wages. With the fall in sterling, those wages are even lower in euro and other eastern European currencies. As the economy weakens, the UK will look even less attractive and potential immigrants will look for work elsewhere. Wages will go up in sectors like care and security, but those working in the retail, hospitality and construction sectors are unlikely to benefit as these industries will be hit hardest by the squeeze in household incomes.

Howard Davies, chairman, Royal Bank of Scotland

In the short run I think immigration will continue to be strong, as EU migrants try to get in ahead of Brexit, but that movement will turn round in the course of 2108.

Richard Davies

For many people considering a move to the UK, Brexit means the clock is ticking. We might see inflows as people bring forward their migration plans. For those that are here, Brexit makes them feel unwelcome, and adds uncertainty. So they may bring forward plans to head home. So I would expect an increased flow, in both directions. The net level is hard to predict, but if pushed I would say slightly lower.

Paul De Grauwe, professor, London School of Economics

Immigration is likely to slow down (but probably not towards the “tens of thousands”). A slow down in immigration will negatively affect UK economic growth.

Panicos Demetriades, professor of financial economics, University of Leicester and former governor of the Central Bank of Cyprus,

Economic research shows beyond any doubt that openness is one of the most important and most robust determinants of long term growth. Any decrease in openness is bound to have an impact on the UK economy. European leaders have said many times that Britain can’t cherry pick. The UK can’t restrict immigration and retain the other freedoms of the single market. One also must not forget that free trade is not just about tariffs, there are significant non trade barriers that the EU has eliminated over time, which the UK is likely to face outside the EU.

Wouter Den Haan, professor, London School of Economics

The evidence that is out there suggests that immigration is good for the UK economy as a whole, but not for everybody. If immigration is indeed drastically reduced, then that could be harmful with growth. One might hope that such a reduction will reduce political tension — the angry white men issue — but I am afraid that is not going to happen.

Michael Dicks, chief economist, Wadhwani Asset Management

It is quite likely that “measured” immigration will be lowered significantly. This is likely to have some impact on the real thing — an effect magnified by the negative publicity that Brexit has engendered. “True” immigration is unlikely to fall markedly, however. After all, if that is what the authorities had really wanted to achieve, they could have done so by forcing down non-EU immigration prior to Brexit. But they chose not to do so.

The effects on long-term growth are hard to assess. But it might be of the order of 0.1 or 0.2pp to potential growth. In other words, it is not a “killer” force. But it is not an insignificant one either.

Peter Dixon, Commerzbank

Net migration shows no sign of slowing, and although it is possible that some EU citizens may be deterred in 2017 by some of the recent rhetoric I would be surprised if this produces a significant reduction. Moreover, net immigration from non-EU countries remains above that from the EU (a fact that the Brexiters were strangely silent about during the campaign) and flows from this source are likely to remain broadly unchanged for the foreseeable future. At least in 2017, I see no significant change in immigration flows and we have more chance of a reality TV star in the White House than getting immigration down to the “tens of thousands” in the longer term (oh, wait . . .). But if EU immigration numbers are reduced, there are likely to be significant fiscal implications, particularly since those coming to the UK tend to be of working age and pay taxes, although the OBR suggests the adverse effects will play out only over the longer term. Lower immigration will also reduce the contribution of labour to potential GDP growth. Abstracting from the social aspects, which I will leave to others, reduced immigration is likely to have adverse economic consequences unless we can make up for the shortfall by using domestic resources more efficiently.

Kevin Dowd, professor of finance and economics, Durham University

I don’t expect much change to immigration, which has a mostly positive impact on the UK economy.

Charles Dumas, chief economist, TS Lombard

Very little until Brexit is negotiated, which will not be during 2017.

Jan Eeckhout, professor of economics, University College London

With a Norwegian (or similar) deal, little or no change. Without it, there will be strong restrictions on immigration. I currently give the Norwegian deal a 30 per cent chance.

Martin Ellison, professor of economics, University of Oxford

Government immigration policy is already incoherent. The sector that I operate in (higher education) is one of Britain’s outstanding export industries, bringing in billions of pounds of foreign earnings every year. Yet despite this the government seems determined to include students in the immigration count, which then creates incentives to make their arrival in the UK more difficult. I have not seen any convincing argument for doing this — we are simply burning money by stopping people from buying our exports. If, as seems likely, such lack of joined up thinking permeates other aspects of immigration policy then we will find ourselves facing shortages across many key occupations.

Stephanie Flanders, chief market strategist for Europe, J P Morgan Asset Management

I believe inward migration from the EU will be lower if and when Britain actually leaves the EU, but the overall impact on net immigration and skilled flows could be fairly small.

Noble Francis, economics director, Construction Products Association

The extent to which hindering labour flows (rather than migration flows) impact on GDP will differ greatly across different sectors and different regions. For example, within construction, the ONS Labour Force Survey (and please note that ONS surveys tend to understate migrant labour for a variety of reasons) 45 per cent of employment in construction between 2014 and 2016 was migrant labour with 27 per cent from the EU. Anecdotal evidence from housebuilders in London suggest that this is closer to 60-70 per cent. Now, according to the ONS, 80 per cent of employment is within SMEs (large firms win projects but are largely just project managers and subcontract all the work). Whatever hindrance to labour flows is put in place when the UK leaves the EU will have a financial cost and an admin cost, even if it is only work permits. SMEs do not have the resources to deal with these costs. At best, UK construction is likely to have raised considerably raised construction labour costs and necessitate a change in the business model.

John Gieve, chair, Nesta

Net immigration is likely to fall back in 2017 by about 50,000 as the economy creates less jobs, as some students are put off by the reducing prospect of staying on after a degree.

Charles Goodhart

Immigration is largely about perception rather than actuality. The Leave vote was highest where migrants were fewest, but had started to arrive. If you combine students, immigrants where the employers want them, and those whom we cannot refuse, eg because of family ties, then immigration will probably remain quite high. In any case, even on an island, immigration is difficult to control.

Andrew Goodwin, lead UK economist, Oxford Economics

One of the reasons that immigration has been so high over the past few years is that unemployment has been very high elsewhere in the EU. With unemployment now coming down elsewhere in Europe, the motivation for EU nationals to move to the UK should gradually fade so I suspect that net inward migration has already passed its peak. All indications are that the government will pursue a very “populist” immigration policy once we have left the EU, which I would expect to have a material impact on immigration levels. It is difficult to see how this would be anything other than negative for the economy. Given that strong labour force growth has been the key driver of UK potential output growth since the crisis, the need to come up with a solution to the productivity puzzle will become even more pressing.

Rebecca Harding, chief economist, British Bankers’ Association

Net migration is likely to continue to rise marginally during 2017 while policy post Article 50 becomes clear. The effects of immigration on productivity are positive and there is not likely to be a dampening effect on the economy from a net outflow of migration during the year.

Rupert Harrison, chief macro-strategist, BlackRock

I think this is almost impossible to forecast. The OBR forecasts seem like a sensible middle ground for the next few years. Over the long term I think immigration will fall a little further due to political necessity, reducing overall GDP growth at the margin, but it’s very difficult to say what the impact on GDP per capita would be.

Jonathan Haskel, professor of economics, Imperial College Business School, Imperial College London

Immigration from outside the EU is supposed to be under our control and given the politics I would guess that will continue to fall. From within the EU, I would guess that it depends more on economic circumstances relative to the rest of the EU and given the rest of the EU does not seem to be doing so well, I would expect it to be the same. I also think there might be some pre-Brexit rises as people might expect some sort of squatters rights after we leave. So I would expect a continuing change in the composition of immigration away from outside EU, with perhaps a mild overall rise.

John Hawksworth, chief economist, PwC

We would expect a reduction in the net inflow of migrants from other EU countries over the next few years as the prospect of Brexit, slower labour demand growth and the weaker pound make the UK a less attractive destination for EU27 workers. In the short term this may not be too damaging, but in the longer term there could be a material adverse impact on many sectors of the UK economy if undue restrictions are put on the flow of workers to and from the EU27.

Sarah Hewin, chief European economist, Standard Chartered

I expect immigration to peak out in 2017 before starting to fall. The weaker pound is already making the UK a less attractive place to work; slower growth will reduce job opportunities for workers from abroad, and the triggering of Article 50 may discourage students and professionals from committing to the country.

Martin Hutchinson, columnist, The Bear’s Lair

If the government don’t wimp out, immigration will roughly halve. This will greatly benefit the British economy, in terms of GDP per capita.

Ethan Ilzetzki, lecturer in economics, London School of Economics and Centre for Macroeconomics

I do not expect any major change in immigration policy in 2017, as Brexit negotiations will be ongoing. The flow of immigration is likely to continue at its current rate as economic uncertainty will roughly balance out the temptation to “jump over the fence” before the UK exits the EU. I do expect that higher skilled immigration will be adversely affected, but this will have impacts on the UK economy in the long run, not in 2017.

Richard Jeffrey, chief economist, Cazenove Capital Management

I would not expect to see any significant changes in immigration trends in the near term. The UK will remain an attractive place to seek work and there remain evident skill shortages in the UK. Immigration has clearly been of significant benefit to the wider UK economy, although it may have added to pressures on public services. Longer term, it is to be hoped that the UK will continue to welcome workers from overseas who add to the UK’s skill set.

Oliver Jones, economist, Fathom Consulting

A “closed-boarder” policy could push up wage and price inflation if implemented, but a softer approach looks most likely. Potential wage rises would be most likely to benefit low-skilled workers, although those same workers would also be disproportionately hard-hit by higher inflation, particularly food price inflation. Reduced immigration would be negative for the UK economy as a whole, potentially increasing the UK’s productivity issues due to a smaller potential pool of workers from which companies are able to hire and reducing competition.

Dhaval Joshi, chief strategist, BCA Research

Yes, ultimately a full withdrawal from the single market — if it happens — would slow population growth. And as the population growth component in GDP growth has averaged about 1 per cent over the past decade, this is the potential negative impact on structural GDP growth. That said, the improvement in the general standard of living depends on rising GDP per head, which is to say productivity growth. Immigration is generally good for productivity growth, so there is a risk that Brexit also pulls down this second component in GDP growth.

Stephen King, group chief economist, HSBC Investment Bank

If immigration falls, the UK economy as a whole is likely to suffer. The evidence mostly suggests that immigrants are of working age, tend to work rather than claim benefits, and contribute to a more dynamic labour market. Yes, there are important distributional issues raised by immigration but, in aggregate, the effect has been positive. However, successive governments have struggled to bring immigration down so, if it does fall, it’s more likely to reflect a sense on behalf of the immigrants themselves that somehow the UK is no longer as welcoming as it once was.

James Knightley, senior economist, ING

Seeing as there hasn’t been a year (since data has been collected) where the number of EU migrants has exceed the number of non-EU migrants I suspect we will only see a modest dip in total immigration. Student/school fees and property prices are substantially lower for non-EU migrants, which could support inflows. Unemployment remains stubbornly high in many parts of Europe though so the quest for work could keep the UK as a popular destination. Assuming that a transitional arrangement is decided upon fairly early in the Brexit negotiations this too could limit the drop in migration to the UK from the EU. However, the pound’s collapse will make the UK look a less attractive place to go and work due to repatriated earnings being substantially lower than in previous years. With employment growth likely to slow next year and in 2018, modestly lower immigration should not be a major constraint on the economy.

Ruth Lea, economic adviser, Arbuthnot Banking Group

As already indicated, I expect we will have a bespoke immigration policy, probably based on work permits, appropriate to the economic and social needs of the country. I do not expect it to be draconian and have a major impact on the economy. But there will be controls on free movement from the EU (assuming we leave the Single Market), which is likely to reduce the number of EU immigrants entering the unskilled and semi-skilled parts of the UK labour market, meaning that wages (which have arguably been held back by high EU immigration) could rise in these sectors of the labour market.

Warwick Lightfoot, director, Policy Exchange

In 2017 itself very little will change on the immigration front. As one of the first acts of the Brexit negotiation, when it begins in March, the position of EU citizens in the UK and UK citizens in the rest of the EU will be regularised. Anyone who arrived before a certain date (to be determined) will be presumed to have the full rights associated with free movement as it was. The only difficulty will be determining that date to avoid both retrospective legislation and a last minute rush, particularly of people coming to the UK from eastern Europe. The overall big number — ie about 600,000 gross inflow of people coming for one year or more, and 300,000 net immigration — is likely to fall only a small amount in 2017.

In the longer run the main change will be to reduce less skilled labour coming to the UK from the rest of the EU. The immigration “deal” between the UK and EU is likely to continue to allow visa travel for tourism and short visits and to require visas for all kinds of work — light touch for skilled labour and more restrictive for less skilled labour. This will pose some difficulties for sectors most heavily dependent on low skilled European labour such as agriculture/horticulture, the food manufacturing sector and social care (especially in London and the south east). But the changes will be phased in over a relatively long period of time to allow employers to invest in automation, where possible, or try to make the jobs more attractive to British workers.

Agriculture/horticulture is already reported to be facing some recruitment problems even in 2016 partly because of the sharp drop in the value of sterling. The solution here, even in the short term, is to reintroduce the Seasonal Agricultural Workers Scheme which functioned pretty well for many years until it was phased out in 2014. In the longer run (into the 2020s) the effect of reducing access to a large pool of relatively high quality, low cost labour from poorer EU countries will be to increase labour costs in the relevant sectors and force employers to train more and generally make their jobs more attractive to British workers. This may make it uneconomic to, for example, continue growing certain fruits or vegetables and lead to less economic activity overall. This will amplify the argument for a more liberal agricultural trade regime that enables food and agricultural products to be imported at world food prices which would raise the economic welfare of consumers and the welfare of low income households.

John Llewellyn, partner, Llewellyn Consulting

Labour force growth from immigration has boosted UK GDP growth. Immigration is unlikely to change much in the near-term, and if it does there could be important skills shortages across key sectors. Any near-term reduction will probably need to come from non-EU immigration. Long-term impacts from lower immigration would be to reduce growth potential.

Jonathan Loynes, chief economist, Capital Economics

There will probably be some reduction in net immigration after Brexit, but we don’t expect that to have a materially damaging impact on economic growth prospects.

Gerard Lyons, chief economic strategist, Netwealth Investments

I expect the changes in immigration to take place once we have left the EU, which based on current government announcements will be some time in 2019. Given that, I am not expecting a dramatic change in the drivers behind immigration during 2017. I do not have an explicit forecast for immigration in 2017. It makes complete sense for the Government to have a new approach to immigration, and this will likely evolve over the next couple of years in a way that I would expect to be politically acceptable and economically sensible.

Stephen Machin, professor of economics, London School of Economics

It does not seems likely to change much and therefore not much impact to follow. A worry is that high skill immigration is slowed down by current events and attitudes.

Chris Martin, professor, University of Bath

I expect a small-moderate fall in immigration, simply because it this seems a necessity for the current government. I expect a fairly sharp reduction in foreign students (since this is easiest to achieve) and a smaller fall in movement of unskilled workers. I expect this to increase prices by about 3-5% spread over several years and to reduce output by say 1-1.5%

Liz Martins, UK economist, HSBC

No published view on how it will change, but we have done some work on the impact of any change — namely that we would expect restricted migration to push up pay growth in certain sectors, particularly food manufacturing, leisure and facilities maintenance. London would be hardest hit in this case, being the most dependent on immigrant labour, by a wide margin. Other things being equal, tighter immigration could be a negative supply shock to the UK economy. This would reduce output, push up wages and lead either to higher inflation and/or tighter monetary policy. It could also have significant implications for the UK’s already weak fiscal position: EU immigrants have a higher employment rate than either UK-born or non-EU born residents.

Mariana Mazzucato, professor in the economics of innovation, University of Sussex

The policies we are hearing about are knee jerk. They are appealing to populist sentiments which like to blame outsiders. The real problem in the UK economy is due to internal reasons: low investment, low productivity, stagnant real wages, short-term finance, and a corporate governance system which rewards value extraction over value creation. Most studies suggest that the fiscal impact of migration in the UK is relatively small (costing or contributing less than 1 per cent of the country’s overall gross domestic product (GDP). The fiscal impact depends on the characteristics of migrants. Migrants who are young, skilled and working in highly paid jobs are likely to make a more positive net fiscal contribution than those working in low-wage jobs or with low employment rates. The current policies to limit visas to students, and hence to future scientists, make no sense. It will hurt long-term growth which is driven by human capital, R&D and education. Walk into any university lab, and you will hear many languages. That is a strength not a weakness.

Andrew McPhillips, chief economist, YBS Group

It is unlikely we will see significant changes in the levels of immigration in 2017 while the terms of Brexit remain in the negotiation phase. Longer term, the outcome of the negotiations themselves will determine the scale of impact on the economy.

David Meenagh, lecturer, Cardiff University/Liverpool Research Group in Macroeconomics

We think immigration will decrease. Regaining control of mass unskilled immigration whilst allowing skilled workers entry should improve the UK economy.

Hetal Mehta, senior European economist, Legal & General Investment Management

Immigration is not only one of the most contentious issues in the Brexit negotiations, but it is also of huge significance in both economic and political terms. At this stage it is still very difficult to say how much immigration would change. Less EU immigration could be offset by higher non-EU immigration. A key factor will also be the proportion of working age immigrants, and the skills level they bring to the UK. Overall, less working age immigration will slow the pace at which the UK’s labour force grows and will slow the UK’s productive capacity.

Costas Milas, professor of finance, University of Liverpool

Pythagoras famously said that “number rules the universe”. For Brexiters, this number was the notorious £350m a week which (unfortunately) paid off during the referendum. Given that this number has now been discredited (even Brexiters do not mention it any more!), I doubt the “Brexit Department” will risk coming up with a brand new (in the spirit of Pythagoras) target number for immigration. In practice, immigration should not drop by much as such a move would (in my view) harm the UK economy really bad. The university sector (my sector) would definitely suffer if we were to pursue much slower immigration numbers.

David Miles, professor of economics, Imperial College, London

I suspect there will be an attempt by the UK government to increase the skill mix of immigrants. How successful that will be is hard to predict.

Allan Monks, global market strategist, JPMorgan

While immigration is likely to be slower in the long run and reduce potential GDP growth, I do not expect much slowing in net immigration in 2017. Most of the recent rise has been driven by “structural” rather than “cyclical” forces, implying that weaker UK growth and a rise in unemployment next year will do little to slow immigration. There remains a large pay differential that will attract migrant workers. And while the weaker currency reduces the attractiveness of this pay differential for EU immigrants seeking work in the UK, the drop in sterling also increases the incentive for student migrants (who are predominantly from outside the EU) to come for the purpose of study. While weaker economic growth will put some pressure on the government to pursue a soft transition in its Brexit negotiations, an ongoing high level of net immigration will act as a counterweight which will maintain the pressure to keep some form of immigration control as a red line.

Fabrice Montagne, chief UK and senior European economist, Barclays

We expect immigration to have peaked in recent years. Slowdown in the coming years will be driven by the economy (growth slowdown, currency depreciation . . .) and by hard or soft constraints depending on government intention to impose immigration control.

Kathrin Muehlbronner, sovereign risk group, Moody’s Investor’s Service Ltd

Whatever the final Brexit deal, the UK will remain part of the EU next year and hence will have very limited leeway to control immigration. Accordingly, we would not expect a substantial change in flows next year. From an analytic perspective we see immigration as positive given demographic trends of ageing populations, and any broad threats to it as credit negative. In that context, it is positive that there seems to be some recognition by the government that the UK will continue to need migrant workers, at least in specific sectors such as agriculture and also the financial sector.

John Muellbauer, professor, Nuffield College and Institute for New Economic Thinking at the Oxford Martin School

Net immigration is likely to fall as EU workers become more apprehensive about their future in the UK and as relocation of some jobs to the EU gathers pace. The foolishness of including students in the immigration target will become more and more apparent. Sustaining the quality of our Universities and access of employers based in the UK to the most able depends on maintaining the flow of overseas students.

Erik Nielsen, group chief economist, UniCredit

I guess immigration will slow significantly in coming years, and that’ll be a clear drag in growth.

Andrew Oswald, professor of economics and behavioural science, Warwick University

A little. Not much.

David Owen, chief European financial economist, Jefferies

A big step-up in inward migration from the non-EU occurred after the 1997 election, to a peak of 370,000 in 2004. Subsequent attempts to control inflows from the non-EU have not proved that successful (in fact 2015’s number at 279,000 was slightly higher than long-run migration inflows from the rest of the EU) highlighting the problem the government has in hitting any such target. If it is such a concern (and we generally view migration as a positive) then there should be more focus on why successive governments have effectively failed in bringing migration down from the non-EU.

David Paton, professor of industrial economics, Nottingham University Business School

Obviously depends on the negotiations. However, my hope is that we establish a fairer immigration policy which no longer puts Commonwealth nationals and others at a disadvantage relative to EU nationals.

Joseph Pearlman, professor of economics, City University

I can’t see that this will change very much, since my feeling is that we will go for a soft Brexit.

Ann Pettifor, director, Policy Research in Macroeconomics (PRIME)

Not much. And not much effect (in the short term).

John Philpott, director, The Jobs Economist

A likely Brexit deal on immigration will involve much tighter controls on immigration from EU labour into unskilled jobs combined with a greater focus on attracting skilled labour. If handled sensibly this could prove beneficial to UK productivity growth by causing employers who have become over reliant on cheap EU labour to alter work practices and invest more in the skills of the existing workforce. However, “anti-foreigner” feeling could deter skilled migrants which would be harmful to productivity. Overall I expect Brexit to shift the balance of immigration toward skilled migrants rather than lead to a substantially lower level of immigration.

Kallum Pickering, senior uk economist, Berenberg Bank

Despite Brexit, the UK will remain a relatively fast growing developed economy with good long-run prospects and a healthy labour market. It will continue to attract a high level of migration. Migration to the UK may accelerate a little next year as EU migrants try to make the most of the UK’s membership in the EU before barriers are raised after Brexit.

Chris Pissarides, regius professor of economics, LSE

I don’t expect a change in policy in 2017 but I think EU migrants will be less likely to want to come. So immigration from the EU will be less. The impact on the economy as a whole will be very little, if at all, but particular sectors will be affected; eg, construction, especially home maintenance, will become more expensive and it will be more difficult to find people to do the jobs.

Ian Plenderleith, chairman, BH Macro

Immigration numbers are likely to be lower of their own accord, because of UK economic weakness. Plans for tighter explicit controls could begin to have seriously damaging impact because of labour shortages.

Jonathan Portes, professor of economics and public policy, King’s College London

My recent research suggested that EU migration to the UK could fall by well over half over the period from now to 2020, resulting in net EU migration falling by more than 100,000. Both the state of the economy and the existence of free movement of workers are significant determinants of migration flows. In particular, free movement with the UK results in an increase of almost 500 per cent — that is, by a factor of six. It follows any significant restrictions on free movement will reduce those flows.

I also used the existing empirical research on the impact of migration on productivity, growth and wages to estimate the broader economic impacts of such a reduction. Over the period to 2020, the resulting reduction in GDP would be about 0.7 to 1.3 per cent, with a GDP per capita reduction of 0.3 to 0.8 per cent. By contrast, the increase in low-skilled wages resulting from reduced migration is expected to be relatively modest.

Richard Portes, professor of economics, London Business School

Net immigration from EU likely to fall regardless of policy tightening — economic forces and perceptions of UK. And non-EU foreign student “immigration” likely to fall further. Evidence is clear that immigration is significantly positive for growth. So this will be negative for the UK economy in medium and long run.

Adam Posen, president, Peterson Institute for International Economics

I do not know how much it will change. I fear it will change a lot — workers leaving, student places going unfilled, NHS losing doctors — and this will be terrible for the UK economy.

Vicky Pryce, chief economic adviser, CEBR

Immigration has been a positive contributor to growth and productivity in the economy and has allowed firms to expand without serious capacity constraints emerging. It seems to have also reduced the Nairu so one can have more expansionary policies and higher growth for longer with lower equilibrium unemployment levels than could have been sustained, say 20 or even 10 years ago. Migration numbers are meant to be controlled and reduced under Brexit that may happen at some point and this will eventually start to impact on the economy. However, it is not clear quite what the forces may be in the short term. There is some evidence that due to the rather less welcoming environment and fears about future status some Europeans are returning home. Also lower growth next year may make the UK a less attractive place to be- and remittances abroad may look less generous with a weak pound. And we may even see some falls in student numbers as the government feels tempted to cut international student visas to reduce the current net migration figure for 2017 given that current numbers have hugely exceeded government “targets” of “tens of thousands”. Countering this there is always the possibility that we may also see some UK returnees and also increased numbers coming in from the EU to be here and hopefully qualify as residents when the UK finally leaves the EU. Most likely scenario therefore is that the counterbalancing forces will result in little change in net migration numbers in 2017 compared to 2016.

Morten Ravn, professor of economics, University College London

Immigration contributes positively to the UK economy. Were the Brexit negotiations to end up limiting immigration significantly, I think UK universities, industry and the city to suffer (because they would find it harder to hire the best people) plus there would be a negative impact on the budget.

Ricardo Reis, professor of economics, London School of Economics

The immediate effect of the referendum was to increase immigration as more try to get in while they can; the next effect is for it to decline as Britain becomes a less attractive place to live. Whether the inflection point happens in 2017 or not, I don’t know. On the effects, the evidence is clear and was presented and discussed over and over during the referendum campaign: all tallied up, immigration brings benefits on net to the UK economy.

David Riley, head of credit strategy, BlueBay Asset Management

As with every aspect of Brexit, it is simply unknown what will be the implications for immigration into the UK arising from the Brexit negotiations as and when they get under way. Political rather than economic imperatives will likely drive the government’s approach to immigration. A dramatic tightening of immigration will constitute a negative supply shock to the UK economy and lower medium-term growth potential.

Philip Rush, chief economist, Heteronomics

Immigration will probably slow a bit in 2017 but by nowhere near as much as the government would like. That slowdown would not reflect new immigration controls, which cannot come in until after the UK leaves the EU. On the contrary, there is an incentive to migrate pre-Brexit to earn an active national insurance number. Instead, reduced migration would reflect the weakening relative performance of the UK economy and the devaluation of potential earnings remissions since GBP’s midyear decline.

Andrew Scott, professor, London Business School

Falling sterling will do much to slow immigration. The immediate affects will be small as flow is not large relative to the stock.

Andrew Sentance, senior economic adviser, PwC

Anything agreed as a result of Brexit negotiations will not have much impact until the 2020s, immigration included. I think immigration will remain a difficult challenge for the UK and other economies with high living standards. The notion that we can fix our immigration issues by leaving the EU is a myth. In the 2020s, perhaps lower immigration will act as a dampener on growth — but probably not by much. 0.1-0.2 per cent per annum reduction in GDP growth perhaps.

Philip Shaw, chief economist, Investec

The control of immigration is set to be a political red line in discussions with the European Council. So when Brexit actually happens, the UK government will probably need to be seen to be setting policy on immigration from EU countries. What in practice this means for actual migration numbers is totally unclear — note that immigration from non-EU economies has been running at the same level or slightly higher than that from EU countries for a while now. When new immigration rules actually bite, the logical effect would be for wage growth to rise given new restrictions in labour supply. But the UK is not set to leave the EU until early-2019. Hence it is quite feasible that EU immigration increases over the next year or two as entrants pre-empt new British controls. Some stories have suggested that the UK might be able to limit migration from the point that it triggers Article 50 early next year. However this seems unlikely give the necessary buy-in from the rest of the EU.

Andrew Simms, co-director, New Weather Institute

It is tempting to ask, how will we know how much immigration will change? Statistics are notoriously unreliable and, as the Financial Times has pointed out, become ‘less reliable the more detail you look for.’ A significant proportion of immigration is unrelated immediately to Brexit negotiations, though not to broader government policy. But on this, the government appears deeply divide, such as differences in approach to the control of foreign students between Philip Hammond, Theresa May and Amber Rudd. If anything, far from being downgraded by the Brexit debate, the economic importance of immigration to key UK sectors has been made more acutely obvious, ranging from higher education, to food, retail and a range of other service industries. Importantly, many of the drivers of population movement from inequality to conflict and environmental degradation show no sign of lessening and, if anything, growing worse. The tone and promise of government policy seems mostly to affect the degree of xenophobia experienced by immigrants rather than significantly changing their numbers. With all these things in mind, I doubt trends in immigration will change much in 2017 and that this will buoy-up a UK economy facing a wide range of threats.

Andrew Smith, chief economic adviser, Industry Forum

As all the evidence suggests that the economic benefits of immigration outweigh the costs, lower immigration will slow growth. It is too early to say what stance the government will take but we can only hope that it sees sense and avoids the double whammy of a “hard” Brexit: no/narrow EU free-trade agreement and draconian immigration controls.

Peter Spencer, professor of economics, University of York

I don’t think the Prime Minister will want to face the electorate without having made substantial inroads into migration. I think she will be aiming to get the figures down below the 200,000 mark by 2020, but this will not be easy. This will obviously reduce the growth trend over the long term.

James Sproule, chief economist, Institute of Directors

Immigrants remain vital to UK economic growth, from construction and infrastructure to the NHS to start-ups. The worry is that potential immigrants hear in the political rhetoric a particular message and begin to look to other geographic options.

Gary Styles, director, GPS Economics

Immigration looks set to remain at its current high levels for some time to come. If anything the Brexit uncertainties have taken the pressure off politicians to explain how they plan to control or limit immigration. As we know the latest OBR forecasts assumes net immigration eases from around 330k a year to 232k in 2017 and then down to 185k by 2021. A more prudent assumption would be to assume net immigration remains at current levels for the next two years but we see little reason to revisit the economic forecasts at this time.

Paolo Surico, professor of economics, London Business School

I think it will change somehow (at least on paper) but probably by less than hoped (and most likely less than campaigned) by Brexiters. As such, I do not expect this to have material impact on the labour market and I find it even less likely to have a material impact on productivity (which is still one of the main puzzle of the UK economy).

Silvana Tenreyro, professor of economics, London School of Economics

Again, the answer will depend on Brexit. A hard Brexit could have a substantial effect on immigration flows and possibly emigration. The effects on the UK economy will certainly be negative—many firms will need to rethink and reorganise production as they lose talented workers. There are always material costs of reorganisation once you alter a functioning equilibrium. More worrisome, many multinationals might reallocate or move part of their operations to continental Europe, and that would be an additional loss for the UK economy.

Suren Thiru, head of economics, British Chambers of Commerce

We don’t currently forecast immigration levels. However, changes to immigration policy that result in a further squeeze on key business hires and international students could well bear down on job creation, business investment and overall growth.

Phil Thornton, director, Clarity Economics

Immigration is likely to rise as people who want to come to the UK will do so while they can. Assuming that the UK will not leave the EU until March 2017 this incentive will remain. However this may be partially offset by people being deterred by the increasingly hostile language from both citizens groups and politicians (and by any relocations by continental-based employers). However assuming that immigration rise at its recent pace there will not be much impact on the economy — that will come once the UK leaves the EU is the form of lower growth and higher wages in some areas as employers struggle to cope with labour shortages.

Kitty Ussher, managing director, Tooley Street Research Ltd

I don’t think it will be the subject of negotiation at all. The UK will make a policy choice that the default of free movement from other EU countries to the UK will end; this will not be something that is on the table to be discussed alongside other priorities. Over the long term this will dampen the potential growth rate a little as most migrants are net contributors to the UK economy.

Bart van Ark, chief economist, The Conference Board

The UK will need to find a decent solution on keeping a managed flow of immigrants going. The slowing labour force makes it necessary to tap talent globally, but especially from Europe. Some compromise where a point system already applied to non-EU immigrants may also be applied to European immigrants, and could be part of a deal with Europe of keeping the borders open in a “managed way”.

John Van Reenen, professor of economics, MIT

Since negotiations will be still be going on after Article 50 triggered, there will not be much effect. Levels will probably remain high (net migration above 300k) until we exit in 2018 and more controls are then introduced. More EU immigrants will come in 2017 to avoid the 2018 controls. The reduction in immigration will reduce overall growth significantly and reduce GDP per capita a bit. The loss of deep access to Single Market due to ending free movement will be the main negative effect over long-run. Lower immigration will do nothing to help UK workers — see http://cep.lse.ac.uk/pubs/download/brexit05.pdf

Daniel Vernazza, lead UK economist, UniCredit

I suspect immigration will come down next year. The UK economy is likely to slow and that will deter potential immigrants. Set against this, the prospect of restrictions on free movement as early as spring 2019 could encourage potential EU immigrants to bring forward a move to the UK ahead of any rule change. Reduced net immigration will slow economic growth both in aggregate and per capita terms.

John Vickers, warden, All Souls College, Oxford

I just don’t know.

Keith Wade, chief economist, Schroders

It is hard to envisage a deal where the UK does not “take back control” so less immigration seems certain. This means less growth and more inflation (as every economist knows).

Peter Warburton, director, Economic Perspectives

Net migration will probably fall by around 100,000 per year by 2020, but any sharper fall would be economically damaging.

Martin Weale, professor, King’s College London

Not sure. The only safe answer given the difficulties in even measuring migration.

Simon Wells, chief European economist, HSBC

Some sectors, particularly lower paying sectors, are highly reliant on immigrant workers (admin and support, food and accommodation, etc). These sectors may also be most affected by the National Living Wage, which is ramping up. So while overall pay growth should remain fairly contained, there could be pockets where it accelerates. The BoE will find it harder to ‘look through’ any inflationary consequences of this.

Peter Westaway, chief European economist, Vanguard

Under a hard Brexit scenario, immigration will certainly be restricted but even in this case, the falls in immigration may not be as sharp as many hope or expect. Large companies, especially if the City escapes the worst ravages of Brexit, will still need to recruit highly skilled workers from overseas. While elsewhere in the economy, the services sector and agriculture will find life difficult without cheap and plentiful labour supply to support growth, so the criteria by which job restrictions are designed will be crucially important if labour shortages are not to reinforce the trade-related headwinds.

Matthew Whittaker, chief economist, Resolution Foundation

Given that migration played a big role in the Brexit vote, it seems inevitable that numbers will fall in the future, but it’s unclear whether that process will start in 2017 or not.

Whenever it comes, lower migration will reduce overall growth and create potential staffing shortages in sectors such as cleaning, food processing and domestic services that are heavily reliant on migrant labour. Any earnings gains flowing to low paid native workers will be very modest, and will be dwarfed by reductions associated with the wider Brexit process.

One potential side effect of lower migration is the increased incentive it provides some firms with to make investments in new technology and in raising the productivity of their remaining workers. Low value sectors have been too reliant on cheap labour in recent years — both migrant and UK workers — to the detriment of productivity gains. But that doesn’t make any of this easy to manage for low margin firms who don’t yet know what the future landscape will look like.

Mike Wickens, emeritus professor of economics, University of York

The EU is determined to make Brexit as costly for the UK as it can for political reasons even though this will harm the EU economically. The UK will then be drawn into attempting self-harm by limiting EU immigration while the main problem, non-EU immigration, is ignored. The UK needs a green card system that focuses on work.

Neil Williams, group chief economist, Hermes Investment Management

Not much change. With elections coming in France, Germany, The Netherlands, and maybe now Italy and Spain, there may be little sympathy for a quick, ‘no-strings’ UK deal once Article 50 is triggered. Our exit negotiations could thus take much longer than the three years needed in 1982-1985 by Greenland. Even a ‘soft exit’ to a Norway or Switzerland-style associate membership will probably need several years just to end up close to square one. Even outside, we will probably have to compromise to retain Single Market access. After all, this is the second European ‘marriage’ we will have left, after the ERM in 1992. So, any trade tie-ups agreed to in the future may not be ‘without strings’ — just like EU membership then!

Professor Trevor Williams, visiting professor, University of Derby

Immigration should slow as the economy slows rather due to Brexit as the UK has not left the EU single market and pets for no access no free movement of labour. Slower inflow of skilled and unskilled people that filled gaps in the labour force will weaken the economy but it will be hard to quantify in a single year.

Stephen Wright, professor of economics, Birkbeck, University of London

EU immigration will be reduced. This will be modestly bad for the economy.

Linda Yueh, adjunct professor of economics, London Business School

I don’t see much change in immigration next year as the process for leaving the EU is unclear and likely to take some time, so freedom of movement will be unaffected for a while. Of course, as the UK may want to remain in the EU Single Market at least for certain sectors, much of the economic impact will depend on if the EU will insist on maintaining free movement of people for any such access.

Azad Zangana, senior European economist and strategist, Schroders Investment Management

This is a question for 2019 and beyond. If anything, there could be a sharp increase in immigration in 2017, as migrants attempt to arrive before restrictions are imposed. If restrictions are applied, then companies may have to raise wages to be able to fill jobs. This could lead to a loss in competitiveness caused by staff shortages.