The Strategist

Influx of labor migrants to Britain falls to a record low

06/22/2017 - 12:24

The rate of the British pound dropped to a two-month low. The instability of the British currency and the uncertainty of the prospects for the British economy have affected the state of the labor market - according to the Oxford Migration Observatory, in the first quarter of 2017 the influx of migrants from Eastern and Central Europe fell to a record level since 2004.

Today, the pound sterling has reached the level of $ 1,262 - the minimum since mid-April. Experts explain such dynamics by the Bank of England’s decision not to raise the discount rate in the near future, and investors' doubt that Teresa May, whose Conservative party lost control over the parliament after the elections, would manage to retain the minority government. Yesterday, Head of the Bank of England, Mark Carney, said that "it is not time yet" to begin to tighten monetary policy by raising the discount rate. Nevertheless, many investors expected such measures, since the data released last week showed that in May inflation in Britain was 2.9%, which exceeded analysts’ forecasts for the second quarter (2.7%) and the Bank of England itself (2, 65%).

The internal political uncertainty, the weakening pound and the difficult situation surrounding the Brexit negotiations lead to a reduction in the flow of labor migrants from Eastern Europe, which has traditionally been considered one of the main suppliers of labor to the country. Such conclusions are contained in the Oxford Migration Observatory’s survey released yesterday. The paper reported that the net influx of migrants from the so-called A8 (Poland, Latvia, Lithuania, Estonia, Hungary, Czech Republic, Slovakia, Slovenia, joined the EU in 2004) in 2016 was only 5 thousand people. 73,000 people with working visas entered Britain from these countries in 2015, and 27 thousand left. In 2016, however, there were 48 thousand and 43 thousand, respectively. This is the lowest annual indicator of net migration since 2004. The situation remains the same this year - in the first quarter the number of immigrants from the A8 countries registered in the British social security system (mandatory requirement for legal work) was 26 thousand people.

Oxford Migration Observatory experts explain the weaker flow of labor migrants in the country by the weakness of the currency, whose rate was subjected to pressure after last year's referendum on Brexit. Having been lowered in relation to the euro, the pound noticeably diminished the attractiveness of work in Britain for citizens of the EU countries. This fact becomes especially obvious against the backdrop of strengthening the economy of other European countries, which attractiveness among labor migrants is growing. Another reason is the xenophobia exacerbated after the referendum. The British authorities recorded an increase in the number of attacks on migrants, including Poles and other citizens of Eastern Europe, which caused a resonance both in the UK itself and in Europe.