The Startup Magazine Effects of the Post Brexit UK Immigration Rules on its Economy

The effects of the new post Brexit immigration law on the UK economy have yet to be fully felt. This has led to an influx of people seeking immigration advice from immigration solicitors as there are now stricter rules in place since January 2021. Over the coming years we will begin to see the trends and impacts of the new UK immigration rules on the UK economy, the numbers of migrants from both EU and non-EU countries, and on aspects of life such as wages, education, and general productivity levels of labour.

UK immigration rules
Source: Luke Price

New Immigration Rules

There are greater restrictions on migrants from the European Union looking to come to the UK since a new immigration law was implemented in the wake of the Brexit referendum result of 2016. The new rules ended free movement of people between the UK and the European Union or the European Economic Area. This was the same time as the UK-EU Trade and Cooperation Agreement came into effect.

Settled status – any residents in the UK originally from the EU or Switzerland had the right to remain indefinitely under the ‘settled status’ scheme. By the end of March 2022 there had been 6.5 million applications.

Exceptions – the new system applies to any person moving to the UK for work, to study, or for family reasons. An exception to this rule is for Irish citizens.

Hong Kong – there is an expectation that there will be a rise in British Overseas passport holders from Hong Kong moving to the UK due to conditions in Hong Kong and relations with mainland China. 

The specifics of the new rules are:

·       A skilled worker visa is available to applicants entering the UK to take up a job with a salary higher than £25,600 or the lower quartile of the average salary, or in an occupation with required qualifications equivalent to A-level

·       If a sector is short of workers there is a lower threshold for salary, as low as £20,000

·       There is a lower threshold of salary for those entering the UK to study – especially for PhDs in science, mathematics, technology, and similar sectors

·       International students have the right to remain in the UK for up to two years after graduation

Economic Effects of Post-Brexit Immigration

There were figures of migration studied between the opening of labour markets and migration from EU countries to the UK in the early 2000s until 2016, and then between the Brexit referendum until the first instance of the impact of Covid-19. The pandemic has confused figures a little, as there has been both an impact on travel and wider economies in that time, although things are now moving in a more ‘traditional’ manner, and we will begin to see the true impact of Brexit on immigration and the UK economy over the coming years.

It is thought that the tighter immigration laws might not have a big impact on GDP either way, though it is thought that the higher the number of migrant workers, the more productive workers are generally, with a raising of standards in native workers often witnessed. Migrants not only spur entrepreneurship, they also pay more tax in general, both into public services and indirectly. The impact of migration is positive on the whole, so could we see long-term a negative impact on the UK economy as we see fewer migrants entering the UK to work and study?

Impact on Wages

One of the main ideas of tightening immigration law in the UK was to realign to a state where higher paid migrants with skills were more desirable to the economy, and that there were fewer instances of low-paid migrants moving to the UK and depressing wages for native lower-skilled workers. This has worked to attract higher paid migrants in some cases but has led to a shortage of vacancies in relatively low-paid sectors such as hospitality. This does not yet appear to have had a significant impact on relative wages.

Impact on Education

The new immigration law in the UK is bound to have a continued impact on the university and wider economic sector. The graduate visa in the UK makes it more attractive to non-EU migrants, and we continue to see an influx of students from India, Nigeria, China, and other countries. Paradoxically, the state of the economy, living standards, and the cost of domestic fees to universities make them less attractive to UK and EU students than ever before. This might mean short-term positive impacts on the UK economy due to international student fees, but long-term it might have a negative impact on the economy due to the reduction in UK-based graduates.

Understanding the impact of new UK immigration rules and looking for UK immigration advice will help determine the potential outcome for a migrant looking to move to the UK for whatever reason. The better advice you have from legal experts, the better your chances are in terms of getting the application process correct, minimising delays and staying abreast of any changes in law that might take place during your application.

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