Tech industry leaders in the UK say government plans to cut immigration will increase talent shortages in key sectors and force startups to relocate.
In May the UK government announced a wave of measures to cut legal migration to the country, with Prime Minister Keir Starmer drawing criticism for saying the country risked becoming an “island of strangers”. Net migration almost halved in 2024, according to government statistics.
While Starmer promised more visas for “highly skilled” tech workers, the minimum salary threshold for the Skilled Worker visa and the number of years an individual needs to live in the UK to remain indefinitely were raised.
Tech entrepreneurs and startup operators say these measures and ongoing anti-immigrant rhetoric will make it significantly harder to recruit overseas talent and cause some to consider relocation themselves.
“The PM’s anti-immigration rhetoric has alarmed the UK’s top foreign talent and risks throttling the inflow of high-skilled workers we need to drive growth,” says Barney Hussey-Yeo, founder and CEO at AI fintech Cleo.
Sifted recently reported how UK-born founders and investors were increasingly upping sticks to countries like the UAE and US, seeking to take advantage of tax breaks and greater access to capital.
Hussey-Yeo says: “At Cleo, several of our international ML engineers have expressed concerns about their long-term future in the UK, with some already exploring opportunities elsewhere in Europe.”
Tightening talent bottlenecks
Under plans outlined in a government white paper in May, the time migrants have to spend continuously residing in the UK before being able to apply for settled status, or indefinite leave to remain (ILR), will double from five to 10 years.
There will be a points-based system allowing people to qualify sooner based on their “contributions to the UK economy and society” — though more details on this haven’t yet been released.
The government has promised more visas for highly skilled tech workers and top university graduates, and doubled the number of workers that overseas businesses can send to the UK with the aim of establishing a presence in the country.
But founders and investors warn that some measures could deter highly skilled tech workers from moving to the UK in the first place and see others leave the country.
“There’s growing concern among non-UK tech professionals about whether the UK is still a long-term option,” says Swedish VC Nicolai Chamizo, founder of Incore Invest, who is actively looking to back startups in the UK.
“Some are quietly exploring alternatives in countries like Germany or the Netherlands, where immigration pathways for skilled tech workers are perceived as more stable and transparent.”
In June 2024, Germany passed a law making it possible for internationals who had lived in the country for five years to apply for dual nationality.
Others point to UK startups already grappling with talent shortages in key sectors such as AI and quantum, as they compete with Big Tech’s growing European presence and increasingly well-funded competition abroad, before changes to migration routes came into action in May.
“We’re tightening migration routes at a time when talent shortages are well-documented, especially in digital and STEM fields,” says Karoli Hindriks, founder and CEO at jobs platform Jobbatical.
“The UK’s domestic talent pipeline simply isn’t producing enough qualified candidates to meet demand.”
Measures introduced by the government in May also saw the minimum salary requirement for Skilled Worker visas rise from £26,200 to £38,700.
This risks limiting UK startups’ access to mid-level developers, designers and product managers which are “crucial to getting a product off the ground”, says Chris Erven, cofounder of KETS Quantum Security.
He adds that those jobs also rarely meet the criteria for Global Talent visas — a UK immigration route designed to attract highly skilled individuals in specific fields, which for the tech sector is managed by Tech Nation.
Tech Nation declined to comment when asked about how the government’s limiting of legal migration is affecting UK tech companies for this article, but said it is an area of “continued interest” for the organisation.
Anti-migrant rhetoric
More than 1m people have come to the UK since 2021 on skilled worker visas, or as accompanying family members — of which nearly two thirds are NHS and care workers and their families.
But there have been growing calls from some sections in UK society to significantly slash the number of legal migrants entering the country. A growing hard right movement, led by the Reform party’s Nigel Farage, made huge gains during local council elections in the country in May.
That’s making migrant tech founders and workers reconsider their place in the UK.
“I’m considering relocating as the overall anti migration climate makes me feel there will be greater opportunities elsewhere for exceptional people to make their mark,” says Sebastiaan Debrouwere, founder at ecommerce startup Genie. He adds that he’s already seeing a number of his angel investments and founder network making moves to the US or Berlin.
“I came to the UK from Canada to grow my career in tech,” says one Cleo engineer, who asked to remain anonymous. “I work in AI, speak English, own a home and pay one of the highest tax rates in the country.”
“Now I’m being told that might not be enough — that I’ll need to wait 10 years just to apply to stay. It’s like I’m good enough to build the future, but not welcome to be part of it,” they add.
“If I’d known the rules would change like this, I’m not sure I would’ve uprooted my life to come here. And now I’d think twice before encouraging others to do the same.”
One tech worker, who is one year away from qualifying for ILR, calls recent government moves “self-destructive”.
“Tech workers have more transferrable skills and could choose to pursue up to 2X higher income jobs in the US or UAE,” they say. “The economic tradeoff was compensated by the 5 year route to ILR in a country that has largely been stable, sane and welcoming towards them.”
They add that they turned down two opportunities to move to the US through their previous companies Amazon and Adobe.
“Skilled workers like me have paid upwards of £100K in taxes,” they say. “For the first time in my 8 years in the UK and not unlike many of my expat friends, I feel like I am no longer welcome here.”
Critics of the government’s push to limit legal migration into the UK’s tech sector point to the number of the country’s most successful startups being founded by immigrants, including fintechs like Revolut, Checkout and Wise.
Now there are increasing signs that even homegrown founders and investors are considering relocating outside of the country.
“If the UK wants to remain a hub for innovation and entrepreneurship, international recruitment has to be part of the solution,” says Hindriks.
Read the orginal article: https://sifted.eu/articles/uk-immigration-policy/
