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Business News

Brake on hiring foreigners set to slow UK's globalisation efforts

Britain's efforts to further globalise its economy will slip backwards over the next three years because of new immigration rules that will hit the hiring of foreign nationals.

Accounting firm Ernst & Young' globalisation index forecasts that only Britain and America's cross-border activity will decline despite faltering prospects for the world economy.

The report comes as the business and political elite prepare to gather at the World Economic Forum in Davos, Switzerland, on Wednesday. E&Y believes that globalisation will advance at least up until 2015, with the trend most prominent in mid-sized emerging markets such as Vietnam, Malaysia, Mexico and Colombia.

However, 90 per cent of business executives it polled said they feared a rise of protectionist measures if the global economy slides into a new recession.

The forecast comes as Chancellor George Osborne's deficit-slashing strategy comes under renewed scrutiny on Thursday with official figures set to show that Britain is on the verge of sliding into a double-dip. Forecasters are pencilling in a 0.1 per cent fall in output between October and December, the first time the UK economy has shrunk for a year.

The government angered some large companies last year with plans for a clampdown on visa applications. Professional services firms including E&Y and PricewaterhouseCoopers argue that a migration cap would limit firms' ability to compete with other countries to recruit the best staff in a global marketplace.

However, immigration remains a hot topic, with new figures last week revealing that 370,000 migrants are claiming unemployment benefit at a cost to the taxpayer of billions of pounds a year.