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The Guardian
4 days ago
- Business
- The Guardian
Tighter immigration rules could hit UK net zero mission, report warns
Tough rules announced in the government's immigration white paper could jeopardise the UK's net zero mission by causing labour shortages, a report has warned. Labour's white paper released last month included plans to raise the minimum qualification for skilled worker visas from A-level equivalent to degree and to maintain the higher salary threshold of £38,700 introduced by the outgoing Conservative government last year. A report by the Centre for European Reform (CER), calculates that more than half of the foreign-born workers doing 'green jobs' in the UK – 260,000 out of 465,000 – would not have been allowed in under the new rules. Ministers are relying on employers to raise wages and provide more training in order to attract domestic workers into these roles, but John Springford, an associate fellow at the CER, said that could push up the costs to consumers of going green. 'If labour shortages raise the cost of decarbonising buildings, fewer people will insulate their homes or buy heat pumps,' he said. Using Office for National Statistics data, the CER defined a green job as one in which more than a third of the worker's time is spent on green tasks. Many of these are in the construction sector, given the need to retrofit homes with low-carbon technologies, for example. The report also suggests construction jobs more generally may be difficult to fill under the new visa regime, casting doubt on the government's target to build 1.5m homes by the end of the parliament. 'Construction is labour-intensive and has a lot of employee turnover, because the work is physical and seasonal. Given that the government's aim is to expand housebuilding and decarbonise buildings concurrently, the sector is most at risk of labour shortages as a result of the government's immigration proposals,' the report says. Labour has announced that the existing 'immigration salary list', which allows people doing specific types of job to be brought in on lower pay, will be replaced with a similar 'temporary shortage list'. To avoid this becoming a long-term measure, the relevant industry will be expected to set out plans to train and recruit more UK workers. The CER said that using a shortage list as a safety valve could be problematic because the higher salary threshold elsewhere means migrants in the sectors with shortages are unlikely to be able to shift into other jobs, leaving them vulnerable to exploitation by the employer who sponsors their visa. This problem arose in social care where holders of health and care visas were subject to exploitation by bad employers, with little chance of moving to another post. 'The government should keep an eye on labour shortages in occupations that are crucial for its net zero and housebuilding missions, and relax visa rules if needed,' Springford said. 'But offering exemptions to the rules for specific occupations is risky.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Other options mooted in the report include offering 'green visas' for jobs that contribute to achieving the government's target of hitting net zero by 2050, or reducing salary and skills thresholds right across the economy. Keir Starmer announced the immigration crackdown last month, claiming it marked the end of 'a squalid chapter for our politics, our economy and our country' in which the post-Brexit Conservative government had overseen soaring migration. Net migration hit a record level above 900,000 in the year to June 2023 before dropping sharply after a series of changes made by Rishi Sunak's government, including tightening the rules for visa applicants to bring in dependents. In the 2024 calendar year net migration was 431,000. Starmer said net migration would fall 'significantly' as a result of the changes he has announced. As well as potentially causing labour shortages in key sectors, economists have said lower net migration could prompt the independent Office for Budget Responsibility to downgrade its growth forecasts. The government has been approached for comment.
Irish Times
26-05-2025
- Business
- Irish Times
The UK's trade performance remains dire
This month the UK has signed trade deals with India, the US and the European Union. At a time of worry about the prospects for world trade, this should be a reason for feeling less depressed about the outlook for Britain. But the deals, while better than none, might not merit even one cheer. The deal with the US will merely limit the damage done by Donald Trump's trade war , one that is particularly unjustified in the case of a loyal ally that does not even have a bilateral trade surplus in goods with his country. The other two are marginal liberalisations. In all, the UK's trade opportunities have been unambiguously worsened since Brexit and now Trump's trade war, relative to what they were before 2016. Any improvement in market access might seem a good thing. But it can easily not be good enough, because the deals themselves are too small or because the performance is too feeble. READ MORE In 'A perfect storm: Britain's trade malaise, weak growth and a new geopolitical moment', published by the Centre for European Reform last week, Anton Spisak lays out the latter story. Between 2019 and 2024, the volume of UK trade grew at a compound annual rate of only 0.3 per cent. This compares terribly with the 4.9 per cent achieved between 1980 and 2008 and the 2.6 per cent achieved between 2008-19. [ Explainer: what is Keir Starmer's Brexit reset deal? Opens in new window ] Declines in growth rates also occurred in France, Germany, the EU, Japan and the US since the financial crisis and even more so since the pandemic. But the UK's growth between 2019 and 2024 was well below that of those other economies – 0.7 per cent for France, 0.8 per cent for Germany, 1.9 per cent for the EU, 1.4 per cent for Japan and 2.4 per cent for the US. For an open economy such as the UK's, a trade performance this poor is truly worrying. 'We're at a critically low level of housing stock' for buyers and renters Listen | 33:06 Not surprisingly, exports have, for the first time in decades, become a net drag on the UK's economic growth, rather than a contributor to it. Thus between 2020 and 2024, the average contribution of exports to real economic growth was minus 0.4 percentage points. This dire performance was driven by what was happening to exports of goods: in real terms, they were 20 per cent lower in the fourth quarter of 2024 than five years before, while exports of services rose by 22 per cent over the same period. Yet, surprisingly, the performance of UK exports of goods to the EU, which were down 19 per cent over this period, was much the same as that of exports of goods to the rest of the world, which were down by 20 per cent. [ UK needs new EU trade deal, not scraps from the White House Opens in new window ] It is indeed puzzling that exports have fallen to a very similar extent to the EU and the rest of the world. One fairly plausible explanation is that supply chains from the EU have been disrupted and that has undermined the competitiveness of UK goods in third markets. Whatever the causes, a trade performance this poor will, if continued, inevitably undermine economic growth, not least via its impact on productivity growth. Unfortunately, there is only one element in the three deals in question that could possibly bring about any noticeable improvement in trade performance. That is the decision of the US to keep in place the 10 per cent tariffs on most British exports. Last Friday, Trump even proposed a 50 per cent general tariff on EU exports to the US. Earlier this month, he also agreed a 30 per cent tariff on China. Such blatant discrimination violates the most fundamental principle of the World Trade Organisation. Yet, on the face of it, this situation might be beneficial to the UK. Two rather large caveats to such optimism can be identified, however. One is that this relatively favourable relationship might shift many times. The other is that even a 10 per cent tariff is about four times higher than average US tariffs used to be before this presidential term. So UK exporters of goods to the US, while perhaps in a favourable position relative to those from China and the EU (and maybe many others), will be at a big disadvantage vis-a-vis domestic US producers. Moreover, the deal with the EU, welcome though it is, will not change the situation on trade to any significant extent. The main exception is the agreement to work towards an agreement to ensure that the 'vast majority' of agri-food exports to the EU will happen without checks or certificates. Yet, in the end the UK is never going to get rich by expanding exports of farm products. What we are seeing then is an economy whose trade performance is dire, above all in goods. This reflects an underlying loss of competitiveness and dynamism. A possible response would be deeper integration with the EU. More important still would be to focus all attention on strengthening the underlying fundamentals of economic performance for an unfriendly world. – Copyright The Financial Times Limited 2025
