How would the termination of free movement in the labour market make a difference to the UK economy?

Freedom of movement for workers is a key part of the European Union’s internal market in which goods, capital, services and people are all able to circulate freely. In the UK in 2014, 15.4% of those in employment were born outside the UK and EU labour migration has increased significantly since the 2004 enlargement. Although research suggests that EU migrants, who are often young and skilled, make an overall fiscal contribution to the UK economy, the issue has become increasingly controversial and politicised. Nevertheless many employers complain of skills shortages and difficulties in filling vacancies as justification for the need for migrant labour. Certain sectors such as hospitality, construction, social care, agriculture and food processing, have seen large numbers of migrant workers recruited and some studies have suggested that this has resulted in a downward pressure on wages at the bottom of the market, although this remains debated. Assuming that the withdrawal from the EU would restrict EU citizens’ access to the UK labour market, this briefing would consider the implications for the UK economy of no longer having a large pool of EU labour readily available. The briefing would consider some of these key questions:

• What would be the overall impact on the UK economy of reduced labour mobility?
• Would the impacts be unevenly felt across different British nations (England, Scotland, Wales, Northern Ireland)?
• How would a withdrawal from the EU affect skill shortages and how would employers react?
• Which sectors would be most affected?
• Would there be an impact on wages?
• What would happen to EU citizens already working in the UK?