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The slowdown in foreign workers is beginning to bite

Throughout its history, London has thrived by attracting people from across the world to the city.

Today, around 40 per cent of Londoners are from another country. They start profitable businesses, work in essential industries, attend the capital’s universities, and bolster London’s reputation as a global cultural melting pot.

In short, the city needs them.

Levels of immigration have always fluctuated, but new data has revealed a worrying drop in the number of adult foreign nationals coming to London – and not just among those from the EU, as might be expected following the referendum vote.

In the year to September 2017, registrations in the capital from the EU were down 16 per cent on the previous year. At the same time, non-EU arrivals fell by 5.5 per cent.

More concerning, perhaps, is that this drop has been sharpest among younger people. For EU nationals aged 25-34, registrations over the same period fell by over 20 per cent.

Brexit has undoubtedly been a poor piece of PR for the capital. The vote to leave and the ensuing uncertainty has likely played a significant role in the overall drop-off of EU workers. But the fact that this drop has been accompanied by a reduction among non-EU arrivals too indicates that London risks losing some of its wider international appeal.

Two notable “push” factors are at work:

  1. The unclear future status of EU nationals in the UK may be putting people off coming, while general perceptions of hostility towards foreigners – justified or not – may also represent a barrier to entry. This is something London mayor Sadiq Khan has tried to counteract with his “London is Open” campaign.
  2. The devaluation of the sterling has made sending money home – a major incentive for economic migrants looking to work here – less appealing.

The slowdown in foreign workers is beginning to bite. Vital sectors such as healthcare and construction, where EU and foreign workforce participation has traditionally been high, have seen large drops in new workers, are struggling to fill vacancies, and face an emerging skills shortage. London’s unemployment is at near record low, suggesting there is little capacity for locals to fit into these jobs, at least in the short term.

If arrivals continue to fall, London’s economy will probably continue to under-perform – across most sectors and most skill levels – while its social vibrancy and international appeal may also be hampered.

Brexit is a challenge as well as an opportunity for a global city of London’s stature – and the decline of foreign nationals is just one manifestation of this. But there are measures which could allow the capital to continue attracting the talent it needs.

Taking students out of net migration targets would be a helpful symbolic start. Polls show there is widespread support for this, as people understand how much foreign students contribute to the economy, and that those who stay after graduation will end up making important contributions to the city.

We could also look to maintain the flow of migrants of all skill levels, perhaps through special work visa regimes for the capital.

Migration is essential to keeping London going. We must ensure that we continue to attract the best talent, and show our diverse communities just how welcome they are.

Tom Colthorpe is a researcher at Centre for London.