It’s over — the Brits have voted to exit the EU. For some this is a disaster and and spells the beginning of the end, and for others it’s a new beginning. Good or bad, the vote will impact talent flows.
The main reason cited by those supporting the Leave side was immigration. Between 1990 and 2015, the UK’s immigrant population more than doubled, from 3.7 million to 8.5 million. In 2015 the UK received 333,000 immigrants. Even though the UK was not part of the Schengen area — 26 countries in the EU that allow completely free movement of people — in 2015 it gained 184,000 immigrants from the EU. Any resident of any EU country has had the right to live and work in the UK, while others have to go through a complex, bureaucratic process to get residency or a work permit.
Net immigration to the UK has averaged some 285,000 people a year over the past three years, adding 0.4 percent to the population every year. While economic data show that immigration has expanded the tax base and kept the price of both food and services down, popular sentiment is that the influx, mainly attributed to the EU’s rules on free movement of labor, is changing the face of the country too fast. A Gallup poll had earlier shown that two thirds of Britons wanted to see a decrease in immigration. David Cameron, the Prime Minister, had set a goal of bringing immigration below 100,000 annually. But given EU rules, achieving that goal is virtually impossible and would effectively require banning anyone from outside the EU to come to the UK.
The Brexit vote potentially sets up other countries in the EU to follow suit. Greater numbers of Italians, French, and Spaniards are tired of the EU than Britons. A recent poll found that 68 percent of Italians, 66 percent of French, and 65 percent of Spanish expressed unfavorable opinions. The alliance will almost certainly crumble should one or more of these countries also leave the EU, returning Europe to a group of individual countries with separate labor laws and data privacy standards.
What it Means for the U.S.
The Brexit decision may well be beneficial to the U.S., at least in terms of talent. Over the long-run the UK may come out ahead economically and even thrive, freed from the EU’s obsession with harmonization of rules and taxes, but in the near-term, uncertainty and a possible contraction of the British economy will likely drive talent to the U.S.
About 11 percent all employment-based green cards — just over 18,000 — are given to EU nationals (including about 6,000 to nationals of the UK). The all-but-certain curbs on immigration in the UK will drive more talent to the U.S., both from the EU and other countries. The Blue Card program — the EU’s equivalent of the Green Card — will certainly be affected and further restrict the flow of talent to Europe. The program was intended to provide a fast-track for skilled workers to gain residency in Europe, but has not been fully implemented outside Germany. With the possibility of other member states leaving the EU, progress on the program is unlikely.
New York City stands to gain the most from Brexit. London is one of the biggest financial centers in the world, and major banks and multinationals will likely move offices and jobs out of the UK to keep their operations in the EU. Several U.S. banks have already begun a process to move several thousand jobs out of London. This will diminish the status of London, to the benefit of New York as an even bigger financial center.