UK Tier 2 work visa cap raises concerns from London businesses

London businesses are postponing expansion plans and even considering moving abroad amidst fears of the UK government placing even tougher restrictions on UK Tier 2 work visas, according to a new report.

The report, conducted by the City of London Corporation, shows London business owners are facing uncertainty over whether the UK Home Office will further lower its annual quota of 20,700 visas for non-EU skilled migrants. Since the introduction of new Tier 1 and Tier 2 visa migration limits in April 2011, business have felt the changes and claim they have had a negative impact on the perceived attractiveness of the UK and London for international firms.

"Against the current backdrop of continuing uncertainty, some global firms are reported to be considering whether they could move key business areas out of the UK," said Stuart Fraser, Policy Chairman at the City of London Corporation. "International companies such as these are also likely to employ large numbers of British workers, with relocation having the potential to damage employment levels, the UK's pool of skills and the tax revenue."

London businesses also voiced concerns that although the UK Tier 2 work visa cap for UK firms has not been reached, there is still a real danger of damaging future competitiveness by basing limits on a period of slow economic growth; Skills shortages could suddenly appear in the future which the current system may be unable to deal with. Specifically, the report warns that a stricter UK immigration Tier 2 work visa cap would be damaging to sectors such as IT and life science which rely on foreign talent.

"A predictable operating environment for business is essential in planning business investment and promoting economic growth," Fraser added. "If immigration is to be capped, we must find a way for the UK's businesses to attract the international talent they need. Uncapped intracompany transfers remain one such method."

UK Immigration Minister Damian Green is expected to announce early next year whether the UK is going to decrease the Tier 2 work visa quota as part of efforts to bring down annual net migration from more than 200,000 to "tens of thousands" by 2015.

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