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Lack of Labor and the Economic Downturn Resulted in the UK Being More Dependent on Immigration

Lack of Labor and the Economic Downturn Resulted in the UK Being More Dependent on Immigration

With a worsening labor shortage and recession, the future of the British economy is gloomy. The PM Sunak administration is planning to take immigration into new consideration as a possible last resort.

In light of the country’s current economic downturn, The Bank of England has issued a warning that the growing number of Britons quitting their jobs has placed an unnecessary burden on the system. Predictions have suggested a rather gloomy future for the British economy, with little to no growth even after the recession ends.

The International Monetary Fund predicts that only one other big economy, Britain, will experience a recession this year (IMF). The Bank of England increased interest rates to their highest point in almost 15 years. With a 0.5% increase, the base rate rose to its highest since October 2008 (from 3.5 to 4 percent).

Additional read: UK: Sponsor License Holders – Latest Changes To Sponsor Duties

It won’t be until 2026 before output reaches pre-pandemic levels. Bloomberg estimates that even a modest expansion of more than 0.7% a year would put the economy at risk of a spike in inflation. 

BOE Governor Andrew Bailey stated, “Since the pandemic’s beginning, we have observed a significant raise in people who are not actively employed. Also, when asked why he was boosting borrowing prices as the UK entered a recession, he stated, “This substantial and ongoing decline in the labor supply weighs on the potential of the UK economy.”

Since there is a severe labor shortage in the British economy, pressure is now being put on Rishi Sunak, the newly appointed prime minister, to address issues causing the economy to falter, such as the declining productivity brought on by a shrinking labor force. The Sunak-led government will undoubtedly rethink its position on immigration due to the labor crisis and forecasts for the tightest cost-of-living squeeze in generations.

UK Labor Shortage

The House of Commons, UK, library reports that the construction (20.7%) and lodging and food services (35.5%) industries had the largest percentages of enterprises experiencing a workforce shortage in November 2022.

Employers say it takes work to find candidates with the necessary abilities. In addition, there were 1.19 million job openings in the UK from September to November 2022, comparable to the number of unemployed persons.

You should also know, How the UK would function if the Brexit Referendum had never occurred and it was still a part of the European Union?

Is Sunak Government Facing Difficult Times?

The UK’s immigration population was to be targeted in a crackdown, PM Sunak had said in November of last year. Productivity, which the BOE reported was averaging 2% a year before the financial crisis of 2008, was the main driver, and production fell to just 0.5% after that. However, in spite of high levels of immigration, benefit modifications and a rise in the number of individuals working later in life limited the economy’s overall supply potential during the time.

In the year leading up to June, net migration increased to a projected record high of 504,000. A spokeswoman for the PM had stated, “To lower total numbers, the prime minister is utterly dedicated. To guarantee that the immigration system works as intended, we are evaluating all options.”

The ONS (Office for National Statistics) reports that records were broken in immigration to the UK due to the Covid-19 pandemic-related increase in travel and the migration of international students enrolled in distance learning programs. A total of 1.1 million long-term immigrants are expected to have arrived during that time, an increase of 435,000 from the previous year. EU nationals made up the largest segment of people departing from Britain.

A substantial labor shortage now calls into question the conservative party’s agenda before the 2025 election, even if the Sunak government is counting on lowering immigration to raise the standard of living in the UK. While immigration made news in 2022, along with business people looking for a liberal migration plan to help the economy, Sunak rejected the proposal, emphasizing the necessity to address illegal immigration to foster trust in the migration system.

For the UK to survive its worst economic downturn, immigration must now be increased, which runs counter to their USP of controlling the need to prevent migrants from undertaking risky crossings over the English Channel. The leveling up of the hopes of Non-British individuals seeking employment in the British Isles will be one to observe, especially if this unusual economic situation continues to survive more migration.

UK has come up with fast visa processing, read this to know more,  New Update: UK Govt Processing Visas In 15 Days And Priority Visa In 5 Days

Brexit’s Effects on Labour Supply

According to experts, the problem may have worsened due to new immigration regulations implemented after Brexit. Various opinions exist regarding how much the UK’s problems with the labor supply are being influenced by variables relating to Brexit. According to the Bank of England, a lower labor supply, fueled by a decline in net migration from the EU, is reportedly partially attributable to slower population growth.

Statistics on how many employers expressly claimed an absence of EU applicants because they could not fill openings are available in a September 2021 ONS article. Over a third of firms in the following sectors: administration (40%), education (39%), and arts and recreation (36%), as well as nearly half of those in the transportation and storage sector (46% of businesses), noted this.

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About the author

Headquartered in Dubai, with offices in 13 countries spread across UK, Europe, Middle East and South Asia, Dynamic Staffing Services is an industry leader within its niche space of international recruitment. Over the last 45 years, DSS has successfully places over 450 000 candidates in the engineering, healthcare, hospitality, IT and manufacturing sector. Please visit us as www.dss-hr.com to learn more about us. We pride ourselves in being an ethical recruitment services provider following the most stringiest regulations towards code of conduct. We recruit talent from Eastern Europe, India, Philippines, Vietnam, Indonesia, Africa, Egypt, Bhutan, Nepal, Bangladesh, Malaysia among other nationalities and place them into 24+ countries. Each year we give jobs to about 12 000 candidates.

A part of the 1500+ people strong Dynamic group, our sister company Dynamic World Education Community focuses on Study Abroad, by helping students find the right education (www.dynamicwec.net), Dynamic immigration focuses on providing immigration services (https://www.dss-hr.com/canada) to families wanting to move to Canada & Altudo focuses on software development and enhancing digital customer experiences (https://www.altudo.co )

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