UK migration figures underscore acute risk of labour shortage, leading business groups warn

'The loss of these vital skills should concern us all' says Matthew Percival, head of employment at the Confederation of British Industry

The Institute of Directors said that the fall in immigration 'should not be celebrated' (Reuters)

Data showing that net migration into the UK has plummeted since the Brexit vote underscores the risk of an acute labour shortage and should be deeply troubling for everyone, leading business groups have warned.

Matthew Percival, head of employment at the Confederation of British Industry, said that EU nationals make a “crucial contribution to UK economic growth and job creation”.

“This latest data reflects a trend many businesses have seen - an increase in the number of EU citizens leaving the country,” he said.

“The loss of these vital skills should concern us all, underlining the importance of urgently providing certainty for millions of workers and their families.”

The CBI, which represents around 190,000 businesses across the UK collectively employing around 7 million people, has issued a slew of damning warnings about the possible impact of Brexit in recent months.

It has called for Britain to remain in the single market and customs union after withdrawal, fearful that tariffs and restrictions on the free movement of labour could damage some of its members irreparably.

The Institute of Directors on Thursday echoed the CBI's concerns saying that the fall in immigration “should not be celebrated”.

“Given unemployment is currently at its lowest level ever, without the 3 million EU citizens living here the UK would have an acute labour shortage. Signs that it is becoming a less attractive place to live and work are a concern,” said Seamus Nevin, head of employment and skills policy at the Institute.

“The IoD has been warning for some time that the ongoing uncertainty over the status and rights of EU citizens already living here is leading to a brain drain of EU staff. We hope that an agreement can be reached as soon as possible to provide reassurance to EU workers and enable the Brexit negotiations to progress to the next stage,” Mr Nevin added.

Gita Petkevica, managing director at Opal Transfer, a European money transfer service, said that the UK is no longer considered an attractive destination for talent from the EU and described this as "extremely concerning".

“The UK economy benefits from drawing in the most talented and hardest working EU nationals. It is a vital component of the UK’s growth,” she said.

Ms Petkevica said that her company had conducted research showing that 5.5 per cent of all small and medium-sized business directors in the UK are from the EU.

“This means that there are over 35,740 entrepreneurial European businesses owners creating jobs, growth and tax revenues in the British economy.”

“If they stop coming to the UK in favour of Germany, Ireland and the Netherlands then that is a problem for the UK,” she said.

Separately on Thursday, a survey compiled by several trade bodies showed that 47 per cent of companies in Britain's food supply chain—which includes farms, food processors, supermarkets and restaurants—said their EU workers are considering their future as a direct result of the Brexit vote.

Nearly a third of respondents to the survey, conducted between March and May, said some EU staff had already departed.

Laurence Olins, chairman of British Summer Fruits, which is the industry body representing soft fruit growers in the UK, said that the migration data underscores his organisation’s own figures that show that in some areas, up to 20 per cent of seasonal workers are leaving farms and returning home due to the uncertainly of Brexit and the fall of the pound against the euro.

“Government has acknowledged the issue, but we need them to work faster. If we do not have the pickers, we do not have a soft fruit industry,” he said.

“If we are going to be out of the single market by 2019 we will need a scheme agreed by September 2018 to allow us to hire people,” he added. “Without it, an incredibly successful soft fruit industry, which contributes millions of pounds to the UK economy, will be crushed.

In June, Theresa May committed to guaranteeing citizens of the EU the right to stay in the UK after Brexit, but details of future immigration agreements remain vague.

At the time, many business leaders also criticised the Prime Minister for taking so long to provide the guarantee.

“This offer could have been made loudly and clearly nearly a year ago in the immediate aftermath of the referendum, which would have spared individuals, communities and employers significant angst and worry,” said Adam Marshall, director general of the British Chambers of Commerce.