Illustrative analysis indicates halving net migration from the EU could reduce average UK GDP per capita by around £60 per person in 2030

Nov 14, 2017

Start adding items to your reading lists:
Save this item to:
This item has been saved to your reading list.
  • PwC’s latest UK Economic Outlook considers the possible impact of lower future net migration from the EU on the UK economy after Brexit based on two alternative ONS population scenarios

  • London is most vulnerable as it has the highest proportion of European Economic Area (EEA) workers in the UK at 14%

  • Sectors most reliant on EEA workers include food manufacturing, construction, hotels and restaurants and warehousing

  • Skills gaps left by lower future net migration from the EU could be filled by enhanced training of UK nationals and automation, but this will take time

  • Boosting skills and supporting digital innovation  will also be crucial to improving productivity as part of the government’s Industrial Strategy

While it remains unclear exactly how Brexit will affect future migration from the EU to the UK, illustrative analysis of a reduction in future net migration from the EU27 to the UK indicates the net impact on average income levels could be relatively small.

Economic modelling by PwC of a recently published alternative ONS population scenario, in which future net EU27 migration to the UK is reduced by 50% compared to the ONS’s principal projection, finds that average UK GDP per capita might be around 0.2% lower in 2030 as a result. The estimated average income loss in 2030 would be equivalent to around £60 per person at 2017 values. Total UK GDP might be just over 1% lower in 2030, but this is largely just due to a smaller total population in the variant ONS scenario with lower net migration from the EU27.

As the ONS stressed, this was an illustrative scenario, not a prediction of what will actually happen to EU migration after Brexit and PwC’s analysis should be interpreted in the same way. It is an illustration of the potential economic impact of net migration from the EU being lower, whether driven by policy changes or other factors such as exchange rates or relative economic growth rates.

The PwC analysis also shows, however, that the restriction of future migration from the EU could have a disproportionate effect on certain industry sectors and regions.

Analysis in PwC’s latest UK Economic Outlook report notes that workers from other EEA countries now account for around 7% of total UK employment, up from just 2% in 2004, but certain sectors are much more reliant on EEA workers than others. In 2016 almost a third (31%) of the UK’s food manufacturing workforce was EEA-born, while accomodation (18%), warehousing (17%), food and beverage services (13%) and construction (10%) are also relatively highly reliant on EEA workers. As the chart below shows, the reliance of these sectors on EEA workers has increased sharply since 2004 in all cases based on PwC analysis of ONS data.

Regionally, London has by far the highest percentage of EEA-born workers at 14%, compared to a UK average of 7% (see table below). PwC also found some sectoral concentrations within regions, particularly in hospitality, healthcare and construction sectors in the capital. London’s construction sector could be particularly hard hit by reduced EU migration: 30% of construction workers in London were EEA migrants in 2016, while a fifth of UK-born construction workers in the capital are due to retire in the next five years and there are currently around 60,000 vacancies in the industry in London.

John Hawksworth, chief economist at PwC, commented:

“Our illustrative estimate of the long term impact of reduced net migration from the EU27 on UK GDP per capita after Brexit is negative, but relatively small compared to the many other uncertainties about average UK income levels in 2030.

“But limiting migration from the EEA could disproportionately impact some sectors and regions. By identifying the industries and areas that could be worst affected, the government can make informed decisions on post-Brexit migration policy and target their support accordingly.

“Curbing recruitment of high skilled workers from the EEA could have particularly negative implications for longer term productivity and the UK’s international competitiveness. It is true that there could be potential benefits of lower EU migration in terms of reduced pressure on transport systems, housing and key public services such as health and education, but these could be more than offset by the loss of skilled EU workers in these sectors if the post-Brexit policy regime is not calibrated correctly.”

The report also finds that, in 2016, around 30% of EEA workers were identified as high skilled, including critical workers in sectors such as medicine, academia, technology, financial and professional services and the arts. But lower skilled migrant workers also make important contributions in many industry sectors and regions. Overall regional shares of workers born in other EEA countries has risen sharply across the UK since 2004 as the table below shows.


% workers EEA born in 2004

% workers EEA born in 2016







UK average



Northern Ireland



Rest of England (ex London)






Source: PwC analysis of ONS Labour Force Survey data. EEA here defined as the EU27, Norway, Iceland and Liechtenstein.

Closing skills gaps will also be key to improving UK productivity. While there are no quick fixes in terms of macroeconomic policy to the issues which have contributed to disappointing productivity performance, the UK government is right to focus on a “horizontal approach” to Industrial Strategy which does not seek to favour individual sectors or businesses. PwC argues four main themes should underpin the government’s Industrial Strategy: developing skills and education; upgrading national infrastructure; supporting investment, innovation and business growth; and ensuring a more regionally balanced economy.

Commenting on the UK’s skills requirements, Julia Onslow-Cole,  global head of immigration at PwC and a member of the Mayor of London’s Brexit expert advisory panel, said:

“In a recent study for London First we estimated that London’s 1.8 million workers contribute a total of around £83 billion to the capital’s economy. If migration from the EU is significantly reduced after Brexit, then government and businesses will need to work together to try and fill the gaps. While enhanced training of UK nationals and automation might be a solution in certain sectors if we look 10-20 years ahead, realistically they’re unlikely to make up fully for any large reduction in EU migrant workers over the next 5-10 years.

“Businesses from all sectors have voiced concern over restrictions to EU migration, but healthcare, hospitality, retail and construction are particularly dependent on EU workers. It’s important that not only do we take steps to retain the EU migrants already living in the UK, but make special provisions for them in the new immigration system post 2021.”


Notes to editors.

  1. PwC’s latest UK Economic Outlook report is available online here 

  2. The PwC modelling work looked at the impact on UK GDP and GDP per capita of two alternative population scenarios published by the ONS on 26th October 2017: their principal projection and a variant where future net migration from the EU27 to the UK was reduced by 50%. As the ONS stressed, this was an illustrative scenario produced for their stakeholders, not any kind of prediction of what would happen to EU migration after Brexit. Our model results for this alternative scenario should be interpreted in the same way as an illustration of the economic impact of net migration from the EU being lower, whether this is driven by policy changes or other factors such as exchange rate or relative economic growth rates. It is not intended as a prediction of what will happen to migration after Brexit.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. © 2017 PwC. All rights reserved

Contact us

Tilly Parke
Manager, media relations, PwC United Kingdom
Tel: +44(0)7551 235 010

Follow us