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24 June 2016

Brexit Britain job prospects could change dramatically – and not for the better

You need businesses to create jobs, and businesses are nervy.

By Julia Rampen

In theory, British workers should be able to celebrate. Now that Britain is leaving the European Union, the UK Parliament will have complete control over who can work in the UK.

More British jobs for British workers, right?

But you don’t have to be a free market neo-liberal capitalist to think there might be a problem if employers keep on sounding as nervous as they do now. 

The Confederation of British Industry issued a lukewarm statement after it became clear voters had chosen Brexit. Director-General Carolyn Fairbairn said: “Many businesses will be concerned and need time to assess the implications. But they are used to dealing with challenge and change and we should be confident they will adapt.

“The urgent priority now is to reassure the markets. We need strong and calm leadership from the Government, working with the Bank of England, to shore up confidence and stability in the economy.

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Simon Walker, director general of the Institute of Directors described it as “a nervy time for business leaders”.

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There are a couple of reasons why Brexit may make job prospects shrivel up and die. 

Firstly, the uncertainty. Businesses hate it. Political change can mean surprise regulation, a temptation to postpone investment and market volatility that affects their bottom line. It’s known as the Montreal Effect. When the French-Canadian province of Quebec held a series of referendums in the 1990s, many of Montreal’s biggest businesses packed up and moved to Toronto, where they could actually plan ahead. 

Tied in with this is the fact many businesses see the UK as a gateway to Europe. Yes, it’s business-friendly and English-speaking, but it’s also a handy hub if you want to reach the rest of the EU’s 508million consumers. Suddenly, with free trade suspended, that advantage is gone. And if businesses fall out of love with London, you can guarantee Frankfurt and Dublin will be waiting with flowers. 

Thirdly, there’s the risk of a recession. Most economic pundits are predicting everything from a slowdown in growth to a complete recession. The impact can be vast and various – we’re still reeling from 2008. But it doesn’t exactly spell “job creation”. 

So what about cutting competition for jobs?

Brexiteers will argue that they can cut the free movement of people, meaning British workers will face less competition for jobs in poorly-paid, low-skilled areas. 

In fact, it’s not that simple. Some of the EU migrants will be filling skills gaps, or working in jobs that weren’t popular with locals, like working in fruit farms. And there’s the question over what will shrink fastest, jobs or competition? 

Even if cutting free movement did help jobseekers, no negotiations are likely to start until October, when a new Prime Minister is chosen. That’s a whole summer to job hunt in. 

Mariano Mamertino, economist at the global job site, Indeed, said: “After months of tortuous, recruitment-sapping uncertainty in Britain’s labour market, the Brexit verdict will deliver more of the same.

“A further, prolonged period of doubt will do little to encourage employers who have already delayed making hiring decisions to come off the fence.

“In the immediate term, some employers who deferred recruitment during the referendum campaign may now start to hire if they decide they can wait no longer.

“But the wider outlook remains hard to read.

“If Brexit is allowed to interrupt the flow of talent to the UK, Britain’s loss will be Ireland’s gain, if skilled workers are lured by its dynamic and English-speaking labour market instead.”