Brexit: the industries that will be hit hardest if EU migrants are forced to leave the UK

Migrant labourers from the EU make up more than 30% of all workers in the manufacture of food products

Hazel Sheffield

Monday 04 July 2016 17:14 BST

Workers from the EU are allowed to continue to work in the UK for the two years of Brexit negotiations

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Food production, agiculture and mining are some of the UK industries that may be fundamentally changed by the EU referendum if migrant labourers are dispelled from the UK, according to the Resolution Foundation.

Researchers looked into which sectors would be most severey hit if Brexit affects the free movement of people in the EU.

They found that manufacturing, agricuture and domestic service jobs would be most severely affected.

Migrant labourers from the EU make up more than 30 per cent of all workers in the manufacture of food products, including jobs like processing cheese and meat, making baked goods and animal slaughter.

Almost a quarter of domestic personnel such as housekeepers and carers come from the EU while one fifth of those working in the accommodation sector, or in hotels and other tourist industries, come from the EU.

Workers from the EU are allowed to continue to work in the UK for the two years of Brexit negotiations, after which their future is uncertain.

Theresa May admits future of EU citizens living in the UK is uncertain

Theresa May, the frontrunner in the Tory leadership race, has warned that the status of EU migrants is up for negotiation, despite calls from Tim Farron, the Liberal Democrat leaders, to guarantee that those already in the EU will have the right to stay and work indefinitely.

EU migrants have a higher employment rate than the UK average, research has shown. Without passporting, which allows the free movement of people, goods and services between countries in the EU, migrant workers from other parts of Europe may not be able to work in the UK so easily.

The National Institute of Economic and Social Research has said that reducing immigration by two-thirds will see the UK economy shrink 9 per cent by 2065.

The UK Government said in the run up to the vote that immigrants from the European Economic Area, including people from Liechtenstein, Iceland, Norway and Switzerland, contribute more than £3bn to the UK economy in taxes and income, a figure that dwarfs the £500m they take in benefits.

Leave campaigners, carried to victory on a mandate to reduce immigration, have so far yet to spell out how they many migrants they plan to let in after Brexit.

But since the vote, immigrants have been the target of a growing number of hate crimes in the UK. Polish families have reported having signs telling them to leave the EU posted through their letter boxes in Huntingdon in Cambridgeshire and verbal abuse directed at immigrants on streets.

6 ways Britain leaving the EU will affect you

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1/66 ways Britain leaving the EU will affect you

6 ways Britain leaving the EU will affect you

More expensive foreign holidays

The first practical effect of a vote to Leave is that the pound will be worth less abroad, meaning foreign holidays will cost us more

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6 ways Britain leaving the EU will affect you

No immediate change in immigration status

The Prime Minister will have to address other immediate concerns. He is likely to reassure nationals of other EU countries living in the UK that their status is unchanged. That is what the Leave campaign has said, so, even after the Brexit negotiations are complete, those who are already in the UK would be allowed to stay

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6 ways Britain leaving the EU will affect you

Higher inflation

A lower pound means that imports would become more expensive. This is likely to mean the return of inflation – a phenomenon with which many of us are unfamiliar because prices have been stable for so long, rising at no more than about 2 per cent a year. The effect may probably not be particularly noticeable in the first few months. At first price rises would be confined to imported goods – food and clothes being the most obvious – but inflation has a tendency to spread and to gain its own momentum

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6 ways Britain leaving the EU will affect you

Interest rates might rise

The trouble with inflation is that the Bank of England has a legal obligation to keep it as close to 2 per cent a year as possible. If a fall in the pound threatens to push prices up faster than this, the Bank will raise interest rates. This acts against inflation in three ways. First, it makes the pound more attractive, because deposits in pounds will earn higher interest. Second, it reduces demand by putting up the cost of borrowing, and especially by taking larger mortgage payments out of the economy. Third, it makes it more expensive for businesses to borrow to expand output

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6 ways Britain leaving the EU will affect you

Did somebody say recession?

Mr Carney, the Treasury and a range of international economists have warned about this. Many Leave voters appear not to have believed them, or to think that they are exaggerating small, long-term effects. But there is no doubt that the Leave vote is a negative shock to the economy. This is because it changes expectations about the economy’s future performance. Even though Britain is not actually be leaving the EU for at least two years, companies and investors will start to move money out of Britain, or to scale back plans for expansion, because they are less confident about what would happen after 2018

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6 ways Britain leaving the EU will affect you

And we wouldn’t even get our money back

All this will be happening while the Prime Minister, whoever he or she is, is negotiating the terms of our future access to the EU single market. In the meantime, our trade with the EU would be unaffected, except that companies elsewhere in the EU may be less interested in buying from us or selling to us, expecting tariff barriers to go up in two years’ time. Whoever the Chancellor is, he or she may feel the need to bring in a new Budget

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A YouGov survey in March cited “immigrants willing to work for low wages” as one of the top three economic problems for leave voters, alongside EU rules and regulations and the last Labour government.

Adam Corlett, economic analyst at the Resolution Foundation, said that greater automation could help employers to cope with the loss of migrant workers.

"The decision to leave the EU could force many companies to fundamentally rethink their business models, particularly those reliant on migrant workers who might not be so readily available in the future. Changes on this scale take time, but many firms will still need to start preparing now, Mr Corlett said.

"For sectors like agriculture, further automation could provide part of the answer to coping with the changed labour market, though it will require a major shift in investment to become a reality," Mr Corlett added.

Industries most reliant on migrant workers

1. Manufacure of food products: 31% of total workers

2. Domestic personnel: 23%

3. Accommodation: 21%

4. Crop, animal production, hunting: 16%

5. Mining of metal ores: 14%

6. Warehousing and support for transport: 15%

7. Services to buildings and landscape: 14%

8. Food and beverage service activities: 13%

9. Manufacture of leather and related: 12%

10. Manufacture of textiles: 11%

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