1. Economics
January 25, 2017

“Less a prize than a problem”: restricting immigration & leaving the Single Market will hit London hard

By Richard Brown

Since the referendum, public discussion about Brexit has hinged on the trade-offs between membership of the Single Market and restrictions on free movement. Time and again, European leaders have emphasised that you can’t have both.

Prime Minister Theresa May’s recent speech has finally brought some clarity, after the shadow dancing, leaks and briefings of recent months. We will take back control of our borders, and leaving the Single Market is a price worth paying.

It may play well outside London, but from the capital’s perspective this trade looks topsy-turvy: the very opposite of what Centre for London polling has indicated that Londoners want. Ensuring continued access to European markets in the incredibly tight timescales proposed will be a major task, and exporters across the country will be following negotiations with interest, if not anxiety. But London exports are already more globalised than the rest of the country’s – and May emphasised the need to protect this City’s trading position in negotiations – so the risks may be slightly less intense for the capital.

Restricting European immigration, on the other hand, is less a prize than a major problem. Some 12 per cent of London’s workers are from other EU countries, compared to seven per cent across the UK, and in some sectors the proportion is as high as 30 per cent.  

May talked of welcoming “high skilled immigration” from Europe; but losing access to a labour market of 500m people is as big a threat for catering and construction as it is for financial and business services. We can and should do more to train Londoners to take these jobs, but there are twice as many EU workers as there are unemployed people in the capital, so there’s no easy alternative.

London thrives on being an open city, attracting young people from across Europe to study, live and work here for a few years, while young Londoners spend time overseas, building skills, contacts and language skills.  The ebb and flow of migration is the lifeblood of a world city, not a threat to it. The balance of opinion is very different in London too: as well as voting to remain in the EU (by a decent, but not overwhelming margin), Londoners are more positive about the economic and social impact of immigration than the rest of the country. 

London should not try to impose its economic and social model on the rest of the UK. But nor should we throw away the openness that underpins the capital’s success, and the contribution it makes to the rest of the UK in terms of taxes. Our current research on Brexit (due to be published in Spring) will be looking at how these aims can be reconciled, and whether we can achieve a model of Brexit that works for both city and nation.

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Richard Brown is Research Director at Centre for London. He tweets as @MinorPlaces.

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