Investing.com - The International Monetary Fund's (IMF) deputy head, Gita Gopinath, has indicated that addressing gaps in the United Kingdom's employment market through immigration could help mitigate soaring inflation rates. Despite concerns from the Prime Minister about high legal immigration levels, Gopinath emphasized the potential benefits of allowing workers to enter and fill critical job shortages.
Recent data from the Office for National Statistics revealed a record net migration level of 606,000 in the UK during 2022. Meanwhile, headline inflation dropped to an annual rate of 8.7% in April; however core inflation increased to its highest point among G7 countries at 6.8%. The IMF deputy managing director believes that strategically bringing in workers to address specific sector needs, it can contribute positively towards reducing inflation.
Official statistics show more than one million job vacancies across various sectors within the UK between January and April 2023. Industries with notably high vacancy ratios include accommodation and food services (5.5%), health and social work (4.5%), as well as professional scientific occupations (4%). Experts attribute these labor shortages largely to Brexit-related disruptions affecting European Union worker flows and pandemic impacts.
Gopinath also discussed her organization's stance on Brexit's long-term effect on the economic growth potential for Britain—maintaining their prediction from four years ago when they estimated a reduction ranging between £900 ($1,200) and £1,300 ($1,700) per person or equivalent to a GDP loss of around 2.5-4%. She acknowledged recent challenges like global pandemics make isolating Brexit-specific repercussions difficult but reiterated confidence in their initial forecast.
In response to the IMF's comments, a Treasury spokesperson highlighted the UK's shift from an "unlimited, unskilled migration" model towards a points-based system designed to prioritize domestic workforce investments and address acute labor shortages as needed. The representative also noted that certain industries like care homes and seafood processing have been added to their shortage occupation list for flexibility in meeting staffing demands.