Brexit is already causing a drop in EU migration to UK

Brexit is little more than a year away, but there is mounting evidence it's having a major impact on the number of European citizens looking to live and work in Britain.

Figures released this week show net migration – the difference between those coming into Britain and those leaving – from other European Union countries falling below 100,000 for the first time since March 2013. Separate figures show the number of EU nationals working in Britain increasing by 101,000, its lowest amount since September 2013.

Both indicate that the June 2016 vote to leave the EU has changed the dynamics of immigration into Britain, where the number of foreign arrivals, resulting impact on local communities, public services and wages was a key reason behind the Brexit vote.

Kallum Pickering, senior UK economist at Berenberg Bank, said on Friday that Brexit is "working" already on the migration front, and that it may make the political calculus facing the British government a little bit easier.

"It puts the government under less pressure than before to introduce restrictive migration policies in order to satisfy some voters' demands for reduced inflows of workers from the EU," he said.

One of the pillars of being a member of the EU is the free movement of people to live and work anywhere in the EU. So a college graduate from, say, Romania, can pack a bag the day after graduation and go look for work anywhere else in the EU.

Unclear

After Brexit, or at least after any transition that the British government agrees on with the EU for the period after official Brexit day on March 29, 2019, that freedom of movement will ostensibly end. As with so many other Brexit-related issues, it's unclear what a future immigration system in Britain will look like, but members of the government of Prime Minister Theresa May have said the country must remain "open" to foreign workers.

Brexit is not the only reason behind the turn in the migration and employment numbers.

The fact that many EU economies, and particularly those in the 19-country eurozone, are enjoying their best period of economic growth for over a decade has lessened the need for many to search opportunities abroad. In 2017, the eurozone economy expanded by 2.5 percent, way ahead of Britain's 1.7 percent growth.

At the height of the eurozone debt crisis, job opportunities were scarce in many countries, notably in Spain and Greece, where unemployment levels rose to around 25 percent.

No longer magnetic

So Britain, whose economy was growing more strongly than most in the EU, had a magnetic pull. In the two years up to the Brexit vote, which also coincided with some of the darkest times financially in the eurozone, the net number of EU citizens working in Britain rose by an average of 250,000 a year.

Also, the relative attraction of Britain financially has diminished, indirectly because of the Brexit vote. After the vote to leave the EU, the pound sank against other currencies, particularly against the euro. One pound is currently worth around 1.14 euros, compared with 1.30 before – a fairly big hit, especially for those sending money back home from Britain.

"When a place loses its appeal, people vote with their feet," Berenberg's Pickering said.

For many parts of the British economy, the implications of this change in EU migration and employment could be profound. Agriculture is one sector that depends hugely on seasonal migrant labor, particularly from central and eastern EU countries.

Worries

Amid worries that fruit and vegetables will be left to rot, Michael Gove, the country's environment minister and one of the most high-profile Brexit campaigners during the referendum, said this week he "fully" understands industry concerns for the need for a post-Brexit seasonal agricultural workers' scheme and promised to announce more details shortly.

Many public services, notably Britain's National Health Service, also rely heavily on migrants from the EU, so the government will likely be careful in the Brexit discussions ahead. Talks over the future trading relationship between Britain and the EU are reaching a key stage and the government is hoping to wrap up in the next couple of months an agreement on the transition, whereby the country maintains the free movement of labor for a period after Brexit as part of the bargain of retaining tariff-free trade.