The drop in EU nationals shows Brexit threatens to undo years of prosperity

It is perhaps not entirely a surprise that on the same day that a significant fall in EU migration to the UK was announced, the Office for National Statistics also downgraded its growth estimates for 2017. It is also a

poignant coincidence that the news arrived on the day ministers in the so-called “inner” Brexit Cabinet (in fact numbering about half of the full Cabinet) gathered at Chequers to sink their differences and unite around some kind of proposal to put to the European Union.

The fact that the number of EU citizens leaving the UK stands at its highest for a decade, at 130,000, is telling. It is an outcome of a number of factors, each real though difficult to weigh precisely.

There’s no doubt, as anecdotal evidence suggests, that many EU nationals already in the UK, whether recently arrived or longer-established, are feeling unsettled about their future rights and prospects in Britain, post-Brexit. A few encountered public hostility directly after the EU referendum result in 2016; many more will have taken Theresa May’s early confusion as a signal that their status in Britain was not entirely secure. The Prime Minster has warmed up her rhetoric since then, and the initial Brexit agreement with the EU does offer greater certainty, but there remain significant questions about the jurisdiction of the European courts and the right to bring other family members to the UK. These are not finally decided.

More prosaically, the slower pace of growth in the economy, despite a vigorous labour market, may also have dampened others’ enthusiasm to remain – and especially as other Western European economies have started to pick up their growth rates and become alternative destinations for mobile migrant workers; and the post-Brexit sharp depreciation in the value of the pound against the euro, Polish zloty and other currencies will also have made working in the UK simply less financially viable, as remissions “home” are worth less. Hence the “Brexodus”.

That Brexodus also needs to be kept in some sort of perspective; overall migration to the UK remains high by most historical standards, and net immigration – taking into account fresh arrivals and non-EU migration – is still running at more than twice the Government’s notional target of 100,000, eight years after it was supposedly implemented. Net migration to the UK, abstracting away its origins, showed only a small decline in 2017, and was back to the levels of 2014.

Still, the economic damage that lower migration could inflict remains, and Brexit has, directly or indirectly, made it worse. That migration has proved so stubbornly resistant to official attempts to bring it down merely demonstrates how necessary it has been, and continues to be, to keep the engine of the economy fuelled. Migrants bring skills, enterprise and hard work to an economy still badly in need of such an infusion; from Zimbabwean nurses in the NHS to German engineers in our car plants to American bankers in the City and taxi drivers from Somalia, each and every one of them makes their own contribution to our national life and prosperity. Ask any potato farmer or fish factory manager or hotel manager what they would do if the supply of foreign labour was to be suddenly cut off.

It’s also worth noting that in 2017, the UK granted asylum, alternative forms of protection or resettlement to only around 15,000 individuals, 40 per cent of whom were under 18 years of age. So much for the Ukip propaganda about a “boiling point”.

Taking the long view, it is apparent that the UK enjoyed higher growth rates over the past three decades or so than either in in this country in the past or relative to Britain’s major economy peers because of three factors. All are now under threat.

First, the free market reforms and liberalisation of the Thatcher years. Many of these were achieved at excessive social cost, while others were simply mistaken; overall, however, they boosted enterprise and growth. Today, in all parties, there are powerful forces pushing back the frontiers of marketisation, advocating a sometimes indiscriminate extension of state ownership and regulation. In some areas, such as housing, the failed PFI contracts and in vital public services, intervention is a necessary corrective; others threaten to make matters worse.

Second, membership of the EU after 1973 subjected UK industry and commerce to fierce competition, which made it more efficient and also benefited consumers with greater choice and often higher quality of goods from the continent. Our eating and drinking habits, for example, have undoubtedly been enriched by European influences, as has much else besides in British life.

Third, migration, mainly from the Eastern European new members of the EU, has supplied the skills and the cheaper unskilled labour that helped push British growth up by perhaps 0.25 percentage points a year in the decade before the financial crash. That may not sound a great deal, but it has had a powerful cumulative effect in lowering costs and prices that has paid for improvements in private living standards and public services. Again, that too is being threatened by a combination of Brexit and a resurgence of a kind of political primitivism that seems to have infected even Jeremy Corbyn’s nominally liberal Labour Party.

So the economic auguries for the next few years are dispiriting. Even if Brexit delivers everything its proponents argue – a far-fetched prospect – it will take many years to arrive, and in the meantime we will simply become poorer relative to our European neighbours, just as we did for the first four decades after the end of the Second World War. One by one, the fundamental strengths and foundations of British economic competitiveness are being slowly dismantled – liberal economics; membership of the vast EU single market; and a supply of labour and skills from beyond these shores. It is, to mix the metaphor and borrow an expression once used infamously in another context, like watching a nation heaping up its own economic funeral pyre.