With changing immigration laws a likely consequence of the UK’s vote to leave the EU, this report examines the current contribution of EU and non-EU labour to the London economy, considers the possible effects of extending existing non-EU immigration controls to EU workers in London, and highlights possible alternatives.

 

The key findings of the report are as follows:

 

–          Immigration, particularly EU-born, accounts for increasing shares of total UK employment – Whereas in 2005, 3% of total UK employment was EU-born, in 2016 it was over 7%.

 

–          London is a hub for immigration and is uniquely impacted by it – London contains just 11% of the nation’s UK nationals, but 35% of the UK’s EU nationals, and 39% of the nation’s non-EU foreign nationals. The share of EU migrants in London is over twice as high as in any other part of the country.

 

–          Migrant workers make up around one quarter of London’s workforce – This compares to 8% for the rest of the UK. Over 15% of London’s workers are EU nationals and over 9% are non-EU foreign nationals.

 

–          EU nationality migrant workers pay an estimated £7 billion in taxes in London annually –  EU-migrants contribute this in direct taxes (income tax and National Insurance Contributions) from earnings of over £30 billion annually, and contribute £26 billion to economic output (in terms of gross value added, GVA) in London.

 

–          Migrants help fill skills shortages in key sectors of the London economy – 24% of workers in London’s financial industry are foreign nationals (London’s finance industry is over two times larger than the national average). In London’s construction industry, 36% are migrant workers (30% EU nationals).

 

–          Immigrants contribute more than they take – Wide-ranging analyses have concluded immigrants make higher net fiscal contributions than native-born citizens.

 

–          The departure of EU immigrants in London would be economically detrimental and put pressure on public funds – The loss of EU nationals working in London would negatively impact key industries and result in a higher dependency ratio, with fewer working age individuals to support care for children and the elderly through tax contributions.

 

–          Within just a few years, extending current Tier 2 visa controls to EU nationals would limit London’s industries – With median wages in many occupations failing to meet minimum visa salary requirements, by 2020 London would have lost access to 160,000 potential migrant workers, particularly in lower-paid occupations. If visa controls were introduced today, by 2020, this would lower GVA by migrants in London by an estimated £6.9 billion, and result in over £2 billion lower tax receipts.

 

–          Regional visa systems have been successfully introduced in other countries to address localised demand for labour and respond to regional skills shortages. Such an approach could be considered for London.

 

This report was commissioned by London Chamber of Commerce and Industry (LCCI), but does not necessarily reflect the views of LCCI