The National Institute of Economic and Social Research (NIESR) predicts the British economy will see its growth hampered by a fall in immigration from Europe. The NIESR report also says that in the case of a ‘middle-range’ Brexit where immigration falls by as much as 91,000 a year, the growth of domestic product per capita will be 3.4% lower by 2030 than it would have been otherwise. If immigration drops by 150,000 a year, the report claims, the drop will be 5.4%.
By contrast, the effect on wages would be positive for Britons working in sectors like agriculture: in the middle-range scenario, NIESR suggests wages could increase by up to 0.51% by 2030 or by 0.82% in a ‘hard’ Brexit outcome. NIESR has admitted the forecasts are ‘highly uncertain’.
NFU economist Anand Dossa said: “We don’t know where the economy is going to be by end of next year let alone 2030. What is much more concerning for farm businesses currently is the introduction of the National Living Wage. The projections, which NIESR themselves say are ‘highly uncertain’, are small in comparison to what we will have to cope with under the NLW going forward.
“The NFU strongly supports the principle of a living wage for all workers in agriculture and horticulture. However, with labour being one of the main cost components for agriculture and horticulture businesses, there is concern that the speed of implementation and increases in the rate to reach the overall ambition by 2020 will make it challenging for some sectors to remain competitive.
“Although this has the potential to impact across all farming sectors, the impact will be most pronounced on businesses where labour is the key input i.e. the horticulture sector where seasonal workers are relied on to harvest crops. Although there has been a modest recovery in farmgate prices of late, largely on the back of the weaker pound, many sectors of the industry remain under pressure with prospects of higher input costs looming. Accelerating increases will make this difficult for employers.”