UK Immigration Reforms Risk Economic Downturn Say Leading Business Groups

The UK government’s proposed immigration reforms have sparked warnings from leading business organisations, who argue the changes could harm the economy if not accompanied by a significant overhaul of skills training. These reforms, championed by Sir Keir Starmer, aim to substantially reduce migration to the UK. However, businesses have raised concerns about the potential negative impact on industries already struggling with skills shortages.

The Institute of Directors emphasised the risks of limiting migrant access without simultaneously addressing the country’s education and training systems. Alex Hall-Chen, a senior policy advisor for employment and skills at the group, highlighted the dangers of further constraining economic growth. She insisted that to make these reforms successful, the government must ensure better coordination between immigration policies and workforce upskilling initiatives.

Stephen Phipson, CEO of industrial trade body Make UK, criticised the apprenticeship levy, calling it a “disastrous” obstacle to effective skills training. He stated that manufacturers turn to overseas talent only as a last resort due to an inadequate domestic training system, arguing that the new industrial strategy must deliver a clear and urgent plan to bridge the technical skills gap.

The British Chambers of Commerce expressed its agreement with the general vision of reducing immigration. However, its Deputy Director of Public Policy, Jane Gratton, warned against rapid reforms that could cut businesses off from overseas talent before solving wider labour market challenges. She stressed the importance of granting firms access to skilled workers, including hiring from abroad when necessary, particularly in sectors facing recruitment difficulties.

Rain Newton-Smith, Chief Executive of the Confederation of British Industry (CBI), echoed these concerns. She pointed out that while businesses prefer to recruit locally, labour shortages are driving a reliance on immigration. Newton-Smith also warned that further restrictions on student visas could harm university funding and damage the UK’s reputation as a global education hub, creating additional issues for the economy.

With the UK’s working-age population set to decline as the population ages, business leaders assert that investment in training and technology adoption must be prioritised. Political promises on reducing migration, they argue, must be balanced with a pragmatic approach to solving the nation’s enduring skills challenges.