The fall in the pound’s value since Brexit has reduced the cost of UK degrees for international students by up to a fifth, but also made low-wage jobs less attractive to foreign workers, new analysis has shown.
A study by the Oxford Migration Observatory suggests that the currency fluctuation will have a variety of different effects on future immigration flows depending on the reasons for a migrants coming to Britain.
International students, for instance, stand to make savings because the weak pound reduces the annual cost of £13,500 undergraduate tuition fees for overseas applicants. Chinese students will have experienced a 13 per cent cut in fees between the June Brexit referendum and the December 2016, while those paying in US dollars would have saved 17 per cent, and those using the South African rand by 20 per cent. This does not take into account further reductions in living costs.
Foreign students arriving in UK in year to September 2016, down by a quarter on the previous year
The findings are significant because the currency shift may help to reverse the recent falls in the number of international students coming to study at British universities.
According to the most recent figures, immigration of students fell by nearly a quarter to 134,000 in the year to September 2016. In particular, the number of Indian students arriving at UK universities halved under the last parliament.
On the other hand, the weak pound risks deterring foreign workers, particularly those in low-wage jobs. The Migration Observatory has calculated that Poles converting sterling into zloty would have received nearly 10 per cent less between the referendum and the end of 2016, while those sending Indian rupees back home would have seen a fall of nearly 15 per cent.
Carlos Vargas-Silva, acting director of the Observatory, said there was no “hard evidence” that the currency change was affecting foreign workers in the UK, “but if you look at the sectors such as agriculture, employers are saying they have to pay more to attract the eastern European workers they used before the currency change”.
“Currencies and exchange rates is just one of many factors affecting migrant behaviour, but if you come to work in a country then the value of the money you’re earning and how much you can send back is an important issue in your decision about where to work,” he said.
Farms and food processing companies have struggled to recruit eastern European workers in the wake of the Brexit referendum. This is thought to be a combination of the effect of the weaker pound and a feeling of being less welcome in the UK since the vote in June last year.
There is a historical precedent for currency changes affecting economic migrants. Research by the Department for Work and Pensions suggests that during the 2007-09 financial crisis, the sterling-zloty exchange rate was tightly correlated with the outflow of eastern European migrants. However, this was also a time when UK unemployment was rising sharply, which may have been an additional factor.
In the short term, Mr Vargas-Silva warned that the currency fluctuations alone are not likely to cause “an increase or decrease in immigration across the board”.
“The differing effects for each group mean this will make the UK more attractive for some migrants and less for others,” he said. “If the devaluation of the pound turns out to be a long-term trend, then we will start to see subtle effects in the immigration figures.”