London’s economy “is beginning to wobble” amid a slump in the numbers of EU workers coming to Britain after the Brexit vote, an influential think tank has found.
The Centre for London said evidence of an economic slowdown included deteriorating house prices and plummeting business confidence, coinciding with a drop in the numbers of Europeans registering to work.
Registrations for new national insurance numbers by foreign workers have dropped 15 per cent since this time last year, with a fall in EU migration accounting for three quarters of the fall, the think tank found.
Kat Hanna, research manager at Centre for London, told HuffPost UK: “We are starting to see the beginnings of the effect Brexit might be having.
“There is some cause for concern, and while we’re not being alarmist, we are saying that we will not know how to handle Brexit without data like this.
“Yet there are positives: unemployment is at a record low in the captial and there are encouraging figures on NEETs (those not in education or training).”
The Centre’s report, The London Intelligence, found fewer foreign workers were seeking permits to work than in previous years - with EU born staff driving the decrease.
“These numbers do fluctuate but it is true to say these numbers are a significant drop,” Hanna said.
“It could be that the decision to leave the EU has sent out signals that London is not a place to come to work.”
The report also revealed:
- Job growth in London is continuing, but is slowing for the first time since early 2015
- London’s continuing population growth was largely fuelled by international migration
- Total crime rates are the highest they have been since 2012
Last week, the boss of pizza chain Franco Manca told the Financial Times that, without EU workers to fill vacancies, bonuses and wages may have to increase.
While Pret A Manger said in March it was concerned about Brexit as, currently, just one in fifty applicants for its roles was British.
But other businesses may make alternative plans to cope with shortages.
“When faced with a shortage of labour, employers will have various options - one of those is to pay higher wages,” Hanna said. “But they may also make other decisions, perhaps to look at offshoring or even automation.”
The research also reveals an apparent slow down in prices for both owned and rented properties.
Annualised growth in rental income fell to its lowest level since 2010, while year-on-year house price growth declined to three percent.
Former ‘up and coming’ boroughs, like Hackney or Lewisham, were found to experience the highest levels of price fluctuations.
“For someone like me, as a renter, I remember hearing people say Brexit would cause house prices to fall,” Hanna said.
“But the dangers are that when things happen at very high speed, it becomes about maintaining the stock for example if landlords decide to sell. That’s when a crash may occur.
“Housing is going to be an issue in London - and a drop in prices by this much won’t necessarily help that many people.”
“London’s economy is beginning to wobble”
Ben Rogers, founder of Centre for London, said: “London has shown remarkable resilience in the years following the recession. But its growth has not been painless.
“Levels of inequality have soared. Congestion, pollution and the housing shortage have all worsened.
“While no-one knows how Brexit will play out, this new analysis suggests that London’s economy is beginning to wobble.”