Is immigration a solution to the UK’s inflation challenge?

Immigration has, and always will, represent a political hot potato. It was at the forefront of the Brexit debate and the recent rise in net migration figures post-Brexit has given rise to further political commentary. It is therefore unsurprising that immigration is also being brought into the discussions around the economic wellbeing of the country.

Immigration’s latest foray into the political discourse comes as the former UK Chancellor Philip Hammond has suggested that easing immigration restrictions could help the UK out of its current financial woes and in turn reduce inflation. With talk of an impending mortgage crisis due to repeated interest rate rises, the prospect of reducing inflation would undoubtedly be welcomed by many UK households struggling with the current cost of living crisis. However, immigration is criticised in some quarters as having a negative impact on society. How easy would it be to change the narrative and suggest that immigration can be positive for the economy and the UK?

There are perceived to be many benefits to immigration including economic, social and cultural. It can also help alleviate the impact of the UK’s ageing population.

If control of the UK borders was a central tenet of the Brexit leave campaign, does that extend to the ability to increase the number of migrant workers entering the UK, as much as reducing the number?

What are the levers that government could adjust to increase migration to the UK if it wanted to? The UK already has a route for skilled workers to come to the UK. This route allows UK employers to sponsor the visa for foreign national workers provided the job on offer is sufficiently skilled and the salary is sufficiently high. Despite this visa route, many sectors are continuing to struggle to recruit staff in a tight labour market and there are calls for more support, particularly for those roles which are currently ineligible for sponsorship under the skilled worker visa route. This is something echoed by the Chief Executive of UKHospitality who this week called for measures to “ease ongoing worker shortage” to help “bring down the cost of doing business and in turn help reduce inflation.”

Easing any immigration restrictions would therefore need to include options to aid staffing pressures that are not currently solved by the existing skilled worker visa route. Options could include extending the Youth Mobility visa route to EU nationals. This route allows young people aged between 18-30 to come to the UK and work for up to two years. Another option could be to introduce a dedicated low-skilled visa route. This was something initially considered when the UK first introduced a points-based immigration system back in 2008, but was ultimately never introduced. However, with the end of free movement, is it time for this option to be revisited?

We regularly work with our clients to review their staffing needs and explore ways immigration can enhance recruitment strategies. If your organisation is in need of advice on the immigration solutions available to assist you meet some of today’s economic challenges, please get in touch with a member of our team to discuss your options.