Britain sees largest drop in EU workers for 5 years, fueling fears of a labor shortage

Chris Ratcliffe | Bloomberg via Getty Images

The number of EU citizens working in the U.K. saw its largest drop in five years during the last three months of 2016, according to a new report from the Office of National Statistics (ONS).

The ONS said Wednesday the number of EU workers dropped by 50,000 to 2.3 million in the last quarter of the year which has stoked fears of a labor shortage in Britain. The Chartered Institute of Personnel and Development (CIPD), a lobby group for the human resources sector, reported Monday that a skills shortage was "starting to bite" with business sectors that employed a high number of EU nationals being particularly vulnerable.

However, given the data was not seasonally adjusted the ONS advised the numbers should be treated with caution. The U.K.'s public sector was found to be the most exposed with 43 percent of education bosses and almost half of health care sector employers indicating that they believed "EU migrants among their workforce were considering leaving their organization and/or the U.K. in 2017."

Brexit taints 'allure of the UK'

"The figures also offer further evidence that Brexit has had a discernable impact on the allure of the U.K. as a place to live and work," Gerwyn Davies, a labor market advisor at the CIPD, said a note.

"As a result, employers in sectors that employ relatively large numbers of EU nationals, which also account for a sizable proportion of vacancies, are likely to come under further recruitment pressures if, as we expect, this trend continues," he concluded.

U.K. Prime Minister Theresa May has thus far refused to guarantee the rights of EU nationals working in Britain before formal Brexit negotiations begin.

May is on track to adhere to her self-imposed pledge to begin exit talks with the rest of the bloc before April, given that Britain's lower house gives approval of the government's so-called Brexit bill on February 8.

The data on Wednesday also showed Britain's unemployment rate held steady at 4.8 percent in the three months to December of 2016, its lowest rate in over a decade.