Brexit sparks fall in foreign skills

A new report reveals a drop in applications from non-EU skilled workers to the UK - and the implications.

David Sapsted

17 February 2020

The number of skilled workers from non-EU nations applying to work in the UK’s private sector has dipped substantially since the vote to leave the European Union (EU), with the tech sector hardest hit, according to new research.

Post-Brexit inbound skills decline

A recent New Economy Report from global business consultants BDO found a nine per cent drop in applicants since the Brexit vote, "raising fears over an increasingly severe talent shortage" after the end of the transition period at the start of next year.Based on data from the UK Visas and Immigration Department, the report says there was a fall of more than 4,000 applications from non-EU workers for Skilled Worker Visas in the private sector in the last financial year - dropping from 48,600 in the 2015-16 Brexit referendum year, to 44,300.The report points out that, with free movement of EU talent due to end when the transition period expires, "there is a risk that skilled worker migration from the European continent could fall further creating potential challenges for some key UK industries".

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While the direct impact of Brexit is considered a major factor in deterring overseas applicants, the report adds there are also indirect effects at play, such as the fact that the fall in the value of the pound has led to skilled workers looking to competing economies for employment.Stuart Lisle, senior tax partner at BDO, comments, “There is already a skills shortage in several key industries, like technology and manufacturing. It is now vitally important that British businesses are still able to bring in talented workers from overseas where necessary, once our exit from the EU is completed.“We want to see the government prioritise the needs of UK businesses and create a worker visa system that attracts the best talent with economically-relevant skills.”

UK tech sector hit by skills drop

The report found that the UK’s technology sector had been the hardest hit by the fall in applications, with the number of non-EU skilled workers applying to enter the UK industry falling by 17 per cent, from 23,700 in 2015-16 to 19,700 in 2018-19.Manufacturing also saw a drop of 14 per cent of applications from outside the EU, with the report pointing out that, in a survey last year by the British Chambers of Commerce, 81 per cent of manufacturers said they had difficulties finding staff.“Being able to out-compete rival economies for talent is one of the reasons the UK has become a global fintech hub in the last decade," says Mr Lisle. "If we want to take a similar position in areas like AI, automated vehicles or advanced manufacturing, it’s vital that the government makes sure the UK retains its ability to attract the world’s best after the EU transition period ends.”

Actively developing home-grown talent

The report said the fall in overseas applicants highlighted the importance of the UK developing a home-grown workforce with the right skills. “The pipeline of talent for UK business is a fundamentally important need for British business. Businesses should take an active role in working with the education sector to engage with students and unlock the talent that we have to deliver sustainable economic success," says Mr Lisle. “Providing mentoring programmes and working with schools to deliver better careers advice are easy wins to engage students in the right subjects and sectors.” The report also welcomed the government's decision to reintroduce the two-year, post-study work visa for foreign graduates in STEM subjects at UK universities.