Anti-immigration politics worry industry ahead of UK general election

Companies around the UK fear a politically motivated clampdown on immigration, leading economists and business groups have warned as companies already face recruitment difficulties.

In the week when the UK’s economic growth forecasts were hiked due to an unexpected rise in net migration last year, experts issued a stern warning against politicians looking to win votes in a “race to the bottom” on immigration.

Chancellor George Osborne’s bullish Budget on Wednesday was to a large degree built on the back of a strong upgrade to gross domestic product forecasts from the Office for Budget Responsibility.

Immigration helped keep the wheels of recovery turning by plugging skills shortages, says CBI

The OBR said that the rise in net migration to 298,000 in the year to September 2014, three times higher than the Conservative party’s 100,000 target, was a crucial factor in its decision to upgrade its forecasts for Britain’s economic growth.

Net migration, which the advisory body modelled to be around 165,000 a year until mid-2019, is calculated to add 0.6% to the potential output of the British economy and increase net tax receipts rather than be a burden.

Political ambitions to cut immigration

But ahead of the 7 May general election, the official Tory party target was to continue to cut annual net migration to 100,000, while Prime Minister David Cameron’s ambition is to cut migration to “tens of thousands” in the next Parliament.

A recent report from the Migration Watch think-tank concluded that the Labour party had no "clear and coherent strategy” to reduce levels of immigration, while the Liberal Democrats are perhaps the most pro-immigration but now fourth-placed in latest election polls.

The leader of the UK Independence Party (Ukip), Nigel Farage, has recently set out his plan to cap the annual inflow to just 50,000.

However, the country’s largest employers’ group has warned that without free movement of workers, the economic recovery would “grind to a halt”.

the BoE's March business conditions report found more recruitment difficulties across the economy

John Cridland, director-general of the Confederation of British Industry (CBI) said: “Immigration has helped keep the wheels of this recovery turning by plugging skills shortages. This has led to more jobs for British people and driven growth.”

“Our hospitals and care homes couldn’t function without overseas workers; building sites that we need to deliver more homes; and big infrastructure projects, such as the roll-out of broadband, would also stall.”

For the UK’s manufacturers an immigration clampdown would be particularly dangerous.

“What feels like a race to the bottom on immigration worries me,” said Martin Temple, chairman of EEF, the manufacturers’ organisation, at a speech in the City this month. “The mood music is that we don’t like the rest of the world. That if you’re not like us or, are different in some way, then you’re not welcome.”

He said not only has immigration enhanced our nation economically but also culturally.

“We need skilled workers from around the world, at the same time as training our own UK workforce.”

Recruitment difficulties reported - including chicken sexers

Immigration may well overall make an even more positive contribution to the economy in coming months and years, as a growing number of sectors have reported recruitment difficulties.

Howard Archer, chief European and UK economist at IHS Global Insight, pointed to the March business conditions report from the Bank of England that found recruitment difficulties across the economy overall “remained somewhat above normal and had become more broad-based”.

With an extremely tight general election closing in fast and high public concern over immigration, Archer said it was “an easy matter for political parties to look to make capital out of” as some immigrants will always exploit the benefits system and create negative newspaper headlines.

“But it does not make the headline news or win votes by pointing to the positive contribution that immigrant workers make to the UK economy,” he said. “Many immigrant workers are very hard working and many do jobs where there is a shortage of skills or UK workers don’t want to do.”

Perhaps one unusual example is the crisis in the UK chicken sexing industry.

The British poultry industry have found it so tough to hire people to determine whether a chick is male or female, that it requested the job be put on an official government list of occupations with chronic staff shortages.

Chris Beauchamp, analyst at IG Group, said the surge in jobs in many industries was one of the surprising facets of the UK’s recovery, defying the doom-laden predictions of five years ago.

“Companies are now regularly reporting a shortage of workers, especially in construction and around London. The rise in immigration continues to fill this gap and boost tax receipts and economic growth in the UK, a reflection of the openness of the economy in the UK.”

From the viewpoint of the City of London, anything that keeps UK economic momentum moving forward was to be welcomed, he added.