EU immigration slows as UK economy hits the skids

First then, immigration, and news today that the extraordinary four-year long surge of migrant workers coming into the UK from the new eastern states of the European Union appears finally to be easing off. According to official figures, more than 850,000 eastern and central Europeans have registered to work in the UK since 2004, with around two thirds coming from Poland. Most of the remainder hail from the other ‘A8’ accession countries that also joined the EU in 2004 – Czech Republic, Estonia, Hungary, Latvia, Lithuania, Slovakia and Slovenia – as well as from last year’s new joiners, Bulgaria and Romania.

These people were primarily attracted to the UK by abundant job opportunities, relatively high wages, and a strong currency. The UK, meanwhile, benefited from a plentiful yet relatively inexpensive supply of quality labor exactly at the time when it needed it most, when the debt-fuelled economy was growing at breakneck speed. At the same time the swelling population boosted the demand for key goods and services, extending and strengthening the decade-long consumer boom. The housing market, for instance, was one major beneficiary of this trend.

Now, however, it seems the UK is losing its appeal. According to new Home Office figures, the numbers of A8 migrants registering to work in the UK dropped by 27% year-on-year in the Q2 of 2008 – the biggest one year fall since the current surge began in 2004. Anecdotally, too, one sees plenty of evidence of recent arrivals packing up and heading homeward.

The reasons, one would think, are pretty self-evident. A rapidly slowing economy and falling living standards, for one, as well as a currency that is finally and belatedly crashing back to earth. At the same many migrants are seeing greater opportunities open up in their home countries; Poland, for instance, has enjoyed something of an economic boom over the past few years, with wages and employment rising, especially in the big urban centres. The Polish currency, meanwhile, has appreciated from over seven zlotys to the pounds five years ago to around four to the pound today.

The unanswered question now is what effect this slowdown will have on the UK economy. Much, of course, depends on events over the next few months and years, and whether we experience a brief but manageable slowdown, a sharp recession, or even a depression. That, of course, will to a certain extent determine the economy’s demand for labor. At the same time, though, it could be argued that the skills imported into the UK with migrant workers may be one of our best hopes of riding out the global slowdown and re-emerging stronger than ever. (Citywire, UK)