European workers are fleeing the UK economy during the pandemic

The pandemic has made Britain’s economy even more British, as workers born in the EU walk away.

Around a quarter million people from the EU have left the UK economy since the start of the year, according to Britain’s Office for National Statistics, as the number of EU nationals who were employed, unemployed, or economically inactive declined substantially. “The UK labor market has seen a pretty dramatic change over the last couple of months,” Sanjay Raja, an economist at Deutsche Bank, said in an email. The drop in labor participation from EU nationals suggests many workers went home during the pandemic, perhaps because of travel restrictions, Raja said.

 

Britain’s EU workers have probably been hit harder by the Covid-19 disruption than those born in the UK, because many tend to be employed in the retail, restaurant, and hotel sectors that have been walloped by the crisis. “Some may have decided to up sticks due to the lack of opportunities,” Jing Teow, a senior economist at PwC, said in an interview.

Students account for some of the change in the “economically inactive” population, which is typical in the summer, Teow noted. But the decline appears to be more severe than usual, likely because of a lack of work opportunities. Young people have been slammed especially hard, as employment among people aged 18 to 24 dropped by 146,000, a record decline.

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A key concern is whether foreign workers return to the UK when the crisis finally fades, as the cost and availability of labor are key components for growth in gross domestic product. “While this may have opened up opportunities for UK-born workers, the drop in the labour force will limit the potential growth of the UK economy,” Raja said. “It’s not very apparent what has happened nor is there really much attention paid to it, but we are monitoring this closely. Perhaps the double whammy of Covid-19 and Brexit was the perfect cocktail for an exodus of EU27 born workers.”

With reporting assistance from Dan Kopf.



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