British consumers may be forced to pay higher prices as a result of a crackdown on EU immigration after Brexit, according to a report by the economics committee of the House of Lords released Friday.
Businesses will have to accept the fact immigration from the EU will fall and may need to raise wages to attract local workers, the lawmakers said in their report on Brexit and the labor market.
“Where migrant workers may not easily be replaced by domestic workers, firms will need to change their business models or increase capital investment in automated processes,” the committee chair, Michael Forsyth, said in a written statement. “All these options may lead to higher prices for consumers.”
The report also warned Britain will struggle to control immigration after it leaves the EU unless it makes major improvements to the quality of its migration data.
Having a strict annual target on the number of migrants allowed to enter the U.K. would risk disrupting businesses and the economy, the Lords wrote. Instead, the U.K. should adopt a “flexible approach” to reducing net migration, providing an adjustment period to allow sectors with a high turnover of staff such as social care and nursing to employ EU workers easily.
“The government must have reliable statistics on migration before it formulates new policy, otherwise it will be making crucial decisions â of vital importance to the country’s businesses â in the dark,” Forsyth said.
“It will take companies time to adapt their business models to be less dependent on EU workers and an implementation period is essential to ensure a smooth transition,” he added.