Record UK Migration Surge Set to Expose Government Divisions

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(Bloomberg) -- Data confirming a record surge in migration into the UK is expected to lay bare splits in the ruling Conservative Party and highlight the economy’s urgent demand for new workers.

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The Office for National Statistics is poised to publish 2022 immigration figures on Thursday that are widely expected to exceed even the record 504,000 reported six months ago. That’s a political problem for Prime Minister Rishi Sunak, who is under pressure to deliver on a long-standing Tory promise to bring down the number of foreigners arriving in the UK each year — a central argument for Britain’s exit from the European Union.

While migration from the continent has gone into reverse, with freedom-of-movement rules ending in 2021, arrivals from elsewhere are soaring. Immigration is now down entirely to policies set during the Conservatives’ 13 years in power.

The surge in migration in the year to June last year was driven by students returning following the pandemic, as well as people fleeing political strife in places like Hong Kong and Ukraine. Workers coming to the UK are doing so under government-sanctioned programs to attract skilled labor.

Business leaders argue that firms need workers as they struggle to fill jobs after the pandemic drove many people out of the labor force. There are still 1.1 million vacancies in the economy, with unemployment close to a record low below 4%.

“Skills shortages and unfilled job vacancies are the stark reality for many businesses across all sectors and regions,” said Shevaun Haviland, director general of the British Chambers of Commerce.

Finding Britons willing to take those jobs is becoming harder. Demand is strongest in industries such as accommodation, food services and retail — too “low-skilled” to make it onto the government’s shortage occupations list, but too low-paid in many cases for domestic workers to want the jobs.

“The UK needs more workers and it needs them now,” said Karoli Hindriks, founder of tech company Jobbatical, which helps businesses relocate and recruit international staff. Even if the shortage-occupation list was expanded, she added, “there’s still the issue of actually getting workers to the UK.”

The current visa process for overseas workers is complex, convoluted and costly, Hindriks said, with the UK having one of the most expensive employment visas in the world.

That risks provoking a backlash at a general election due by early 2025 but expected to be held sometime next year. Polls show immigration and asylum is the No. 2 issue for Conservative voters after the economy.

Earlier this week, Home Secretary Suella Braverman, who oversees immigration policy, urged Britain to cut its reliance on “low-skilled foreign labor,” in a speech seen as an effort to position herself as a possible successor to Sunak. The prime minister has distanced himself from Braverman, saying that more seasonal workers would be allowed into the UK if necessary.

Speaking to the BBC at the Group of Seven summit in Japan, he said immigration was too high, but refused to specify what he thought was an acceptable level.

But cutting immigration means less growth. Official projections show net migration averaging around 265,000 a year until 2028. A fall to 200,000 a year would cause a 0.6% hit to GDP, according to calculations by Bloomberg Economics. A limit of 100,000, a ceiling targeted by the Tories in 2010, but never achieved, would shave 1.5% off GDP — a knock of almost £40 billion ($50 billion).

“Immigration pretty much automatically adds to GDP because there are more people in the country working and consuming,” said John Springford, deputy director of the Centre for European Reform think tank. “We have some good evidence that immigration actually helps to grease the wheels of the labor market a bit, and allows people to hand off lower-productivity tasks to other workers and concentrate on things which they were most productive at.”

Talk of applying restrictions to overseas students, as the Times of London newspaper reported to be under discussion by Sunak earlier this month, is also worrying economists. International students are vital to funding UK universities, as they pay far higher fees than their domestic classmates.

“They are a huge economic benefit to the UK overall,” said Jonathan Portes, professor of economics and public policy at King’s College London and former chief economist for the Cabinet Office. “And the idea that student dependents are somehow a burden doesn’t make any sense. Students who bring dependents have to show that they can support them. So in the worst case, they’re spending money here and they’re not allowed to claim benefits.”

While Sunak has attempted to turn the spotlight on the “small boats” bringing refugees and asylum seekers across the English Channel, those numbers aren’t counted in the long-term migration statistics. The prime minister will be walking a tightrope as he attempts to keep the party’s pledges while appeasing understaffed businesses.

“Training up our British workforce is a top priority for business,” said the BCC’s Haviland. “But that won’t happen overnight, and the pain being felt by business is very real and happening right now.”

Read more:

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  • Sunak’s Crackdown on Channel Migrants Passes Commons Hurdle

  • UK Seeks to Attract Builders With Looser Immigration Rules

--With assistance from Leonora Campbell.

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