SPONSORED: How has the Brexit vote affected freedom of movement between the UK and EU?

The experts at IG, an online trading and investments provider, discuss how the Brexit vote has affected freedom of movement between the UK and the EU.

“Freedom of movement was a key topic in debates ahead of the Brexit referendum in June 2016.

Many of those in favour of Brexit were keen to reduce net migration, while many who opposed Brexit sought to preserve freedom of movement with other EU nations.

While these discussions were focused on life after Brexit, over three years later it still remains a hypothetical situation.

However, the political and economic uncertainty in the UK has already affected migration between the UK and the EU, even without any legislative change.

It is still unclear what shape the “final” conclusion to the Brexit saga will take. The government’s analysis of the Brexit deal proposed by Boris Johnson reveals that it would strip away 6.7% of the UK’s expected trajectory of GDP growth over the next 15 years, leaving a UK resident poorer on average by £2,250 by 2034.

The government remains ideologically committed to fulfilling the results of the 2016 referendum, where ‘Leave’ trumped ‘Remain’.

With most members of opposition parties unable to provide a solution to the current problem, it has created a political impasse.

General election campaigns are characterised by uncertainty, with various parties appearing to be in the ascendancy throughout the process. As was the case this winter, the GBP often fluctuates significantly at such times, given how market sentiments among forex traders affect the value of currency.

This protracted political and economic uncertainty may cause the net rate of long-term migration into the UK to fall even further.

Long-term migration from the EU reached an all-time high in the year before the referendum, with an estimated 184,000 EU citizens settling in the UK in 2015.

This figure had decreased by approximately 46% by the end of 2017, the first full year after the Brexit vote.

However, this is not the biggest decline of long-term migration in the 21st century.

The jump from 127,000 in 2007 to 63,000 in 2008 is approximately a 50% decrease in EU migrants.

The rise in 2007 was the culmination of the expansion of the EU in 2004, which saw ten new nations join the union.

The fall in 2008 was a result of the global economic downturn. As economies recovered, long-term migration began to rise steadily to its peak in 2015.

That an economic downturn affected long-term migration in a similar fashion to the EU referendum will not be lost on opponents to Brexit.

Forex experts have monitored the value of the pound, which spiked at $1.2340 with a no-deal Brexit seemingly off the table.

An apparent commitment to no-deal had caused a prolonged decline in the pound, with traders uncertain about what might happen in such a situation.

However, the prospect of a no-deal Brexit has not significantly reduced the number of EU nationals moving to the UK. Instead, it has increased the number of EU citizens that are leaving UK shores.

The 2017 net migration of EU citizens was 99,000, the result of 243,000 immigrating and 144,000 emigrating. That immigration total is higher than every year preceding 2014.

The reason the 2017 net migration came in lower than 2006, 2007, and 2013 is that the emigration figure of 144,000 is the highest in the ONS records, breaking the previous record of 134,000 in 2008.

The emigration figure in the last full year before the referendum was 86,000, with the number of EU citizens leaving the UK rising by 67% in that two-year period.

The Brexit vote is yet to considerably reduce the number of EU citizens moving to the UK, but it has increased the number that are leaving.

There have already been ramifications for businesses, with the hospitality industry and IT companies last year warning that there were insufficient domestic candidates to adequately fill vacancies.

A Brexit deal would potentially exacerbate these issues, with the government already restricting the number of visas handed to workers from outside of the European Economic Area (EEA).

Once EU workers are beholden to the same visa requirements, some industries could struggle to find the requisite labour. This would consequently reduce the net long-term migration from the EU to the UK.

This data uses the United Nations’ definitions of migration, with short-term covering a period of three to twelve months and long-term covering any greater time period.

In this dataset, the mid-2017 period covers the period from July 1st 2016 to June 30th 2017. The long-term net migration figures for the mid-2017 period are striking, particularly when compared to the relevant short-term statistics.

The referendum had a negligible impact on short-term migration, given that there was no expectation that Brexit would be resolved in a matter of months. Hence, the 2017 short-term migration largely reverted to 2015 levels. While there was a decrease of around 43,000, it appears that the 137,000 figure for 2016 was anomalous. Short-term migration is not yet available for the mid-2018 period, but it will likely remain at a similar level.

The fall in long-term net migration is significant.

A number that had been steadily increasing for four years was almost halved in the year following the referendum, plummeting from 181,000 to 95,000.

The result of the Brexit vote deterred many EU nationals from planning a long-term stay in the UK, whether for employment or for study.

While short-term visitors have been able to plan within theoretical Brexit deadlines, long-term migrants have found the uncertainty to be a compelling reason to leave pre-emptively.

It is widely expected that the UK will fully transition to an Australian-style points-based immigration system, once a Brexit deal has passed and freedom of movement is abolished.

The UK already uses a points-based system for migrants arriving from outside of the EEA (which includes EU nations, plus EFTA states Iceland, Liechtenstein, and Norway). It is reasonable to predict that this system, or something similar, would be extended to cover EU citizens if the UK does leave.

The current UK points-based system has more scope for exemptions that circumvent the points themselves, such as footballers from outside of the EEA that can sign for English clubs without speaking English. It will be interesting to see if those requirements become more stringent in a post-Brexit Britain.

Australia’s system has always valued language and education, but in the 21st century it has weighted job offers and experience more heavily in the accumulation of points. This has shrunk the gap between the economic activity of natives and immigrants from 9.8 percentage points in 2002 to 6.3 in 2013.

In 2018, Australia’s population grew by 313,532 and had a net overseas migration of 237,200, which accounts for 76% of that population change.

In the same year, the UK population grew by 414,223 and had a non-British net migration of 262,000, accounting for 63% of that population change.

That migration excludes the 22,000 with British citizenship who returned to the UK, but it is clear that an immigration system is not the only factor that determines population growth. However, the removal of free movement and the introduction of a points-based system is naturally expected to reduce migration figures after Brexit.

Even if the Brexit vote does never lead to the UK’s departure from the EU, it has already had significant ramifications on the movement of EU citizens.”