LONDON – Immigration to the U.K. from the European Union slowed sharply in the year through March, while business investment in the second quarter was flat, highlighting how last year's Brexit vote is weighing on the British economy.
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The figures come as the U.K. prepares for a fresh round of negotiations with Brussels over the terms of its exit from the EU. Data confirmed that growth in the U.K. in the second quarter was weaker than Germany, France and Italy, as British consumers grapple with rising prices fueled by a weak pound.
The U.K.'s Office for National Statistics said Thursday that the number of EU citizens arriving in the U.K. in the year through March was 248,000, down 7% on a year earlier. The number of EU citizens leaving the country during the same period jumped 37%, to 122,000, driven by an exodus of Poles, Hungarians, Lithuanians and other citizens of the eight nations that joined the EU in 2004, the ONS said.
Analysts say that a weak pound and uncertainty over EU nationals' future status in the U.K. are deterring would-be immigrants. "These statistics confirm that Brexit is having a significant impact on migration flows, even before we have left the EU or any changes are made to law or policy, " said Jonathan Portes, professor of economics and public policy at King's College London.
Opinion polls show that unease over immigration from the EU was a driving force behind Britain's Brexit vote and reducing the number of new arrivals has become a key goal of the government's Brexit policy.
In a series of papers published in the last month, the U.K. has set out its aspirations for its post-Brexit relationship with the EU in areas including trade and data protection. The U.K. has said it wants to leave the bloc's single market, which sets standards for goods and services, and the EU customs union, which applies common tariffs to imports from third countries.
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Talks are due to resume Aug. 28 and the EU has said it won't discuss the U.K.'s future economic relationship with the EU until sufficient progress has been made on a trio of issues: Citizens' rights, the Irish border with Northern Ireland and a financial settlement to cover British commitments to the EU that haven't yet been paid.
The Bank of England has warned that uncertainty over the U.K.'s future ties to the bloc is holding back business investment. The ONS said Thursday that investment was flat in the second quarter and contributed nothing to growth overall. The economy expanded 0.3% in the second quarter, the ONS said, confirming an earlier estimate, an annualized rate of 1.2%.
Growth was driven by modest consumer and government spending, figures showed. The BOE has said business investment and exports will need to make a stronger contribution to growth if the economy is to avoid stalling later this year.
Write to Wiktor Szary at Wiktor.Szary@wsj.com and Jason Douglas at firstname.lastname@example.org
(END) Dow Jones Newswires
August 24, 2017 07:51 ET (11:51 GMT)