Employers are unprepared for the lower levels of migration pledged by the Government after the UK leaves the EU, a survey by think tank the Resolution Foundation suggests.
Almost half (46%) of companies that employed EU or European Economic Area (EEA) nationals said they did not expect any change in the number of migrants they employed over the next 12 months.
Around a quarter (24%) expected to increase the number of EU/EEA nationals they employed, and roughly the same percentage thought the proportion would decrease.
The Resolution Foundation said there was a “stark gap” between what businesses would like to emerge from Brexit negotiations and what the Government had pledged to deliver.
Prime Minister Theresa May pledged to cut migration to tens of thousands, and net migration to the UK fell by a quarter in 2016, to 248,000.
In terms of the type of migration regime businesses would like to see, almost two-thirds said no change to existing freedom of movement (38%) or a system that guarantees free movement with a job offer (26%) would work the best for their business.
Torsten Bell, director of the Resolution Foundation, said: “Many British firms are totally unprepared for this change, particularly when it comes to migration.
“Ministers have compounded this uncertainty by choosing not to answer questions over what a post-Brexit immigration regime might be.
“Whatever people’s views on Brexit, the journey not just the destination matter hugely to growth, jobs and living standards. Now is the time for both firms and government to focus on how we navigate that journey and the changes to our labour market it brings.”
A separate survey, commissioned by the Institute of Directors, has shown a “dramatic drop” in business confidence since last week’s election ended in a hung parliament.
Stephen Martin, the IoD’s director general, said businesses had been thrown into “political limbo”, and that the majority of its members wanted a rapid agreement with the EU on transitional arrangements for Brexit, including clarification on the status of EU workers in the UK.
He said: “The needs of business and discussion of the economy were largely absent from the [general election] campaign, but this crash in confidence shows how urgently that must change in the new Government.”
CBI director-general Carolyn Fairbairn also called for the Government to guarantee EU citizens’ rights before focusing Brexit talks on trade.
She said: “The UK needs to be fast out of the blocks. Agreeing transition arrangements and guaranteeing EU citizens’ rights should be early priorities to get the talks off to a good start and show to the world that trade and people come first.”
There have been calls for May to negotiate on Brexit with cross-party support, which would diminish the likelihood of her pushing through a “hard Brexit” scenario with greatly limited freedom of movement.