The UK government has recently unveiled a new plan to reduce levels of immigration in the country, following a seismic voting swing to the Reform party in local elections. The measures announced by Prime Minister Sir Keir Starmer include changes to settled status applications, phasing out the social care visa scheme, cracking down on employers’ use of lower-paid staff, and raising standards for English language proficiency. The government aims to tighten every aspect of the immigration system to have more control, enforce stricter regulations, and ultimately reduce migration numbers.

While the government has not set specific targets for the reduction in immigration, reports suggest that the new measures could lower net migration by 100,000 per year from 2028, compared to the existing forecast of 340,000 migrants annually. This anticipated decrease in migration levels may not seem significant given the current population of nearly 70 million, but it sets the stage for a potentially more stringent immigration policy in the future.

With the debate around immigration intensifying leading up to the next general election in 2029, it’s essential to consider how these changes could impact various sectors of the economy. One sector that may be particularly affected by lower immigration levels is the grocery industry, specifically major retailers like Tesco and J Sainsbury.

These supermarket giants play a crucial role in the UK economy, with a significant market share and a vast network of stores across the country. The population growth driven by migration has historically contributed to increased demand for food and other essential goods, benefiting supermarkets. The non-discretionary nature of food consumption ensures that grocers are among the first businesses to benefit from population growth.

Additionally, Tesco and Sainsbury’s have a deep understanding of national and regional demand patterns, with a higher concentration of stores in areas experiencing rapid population growth. While the correlation between population growth and sales may not always be straightforward, the overall trend suggests that migration-driven growth has played a significant role in their revenue growth.

Despite the potential impact of changing immigration policies on the labor market, the grocers have already adapted to a post-Brexit environment with stricter rules on immigration. Investments in automation, productivity, and digitization have helped mitigate the risks associated with a reduced supply of immigrant labor. The grocers remain resilient in the face of changing demographics and are prepared to navigate any challenges that may arise.

As the government and political parties advocate for tighter control over immigration levels, the medium-term outlook for population growth in the UK may be uncertain. However, Tesco, Sainsbury’s, and other supermarket chains are well-positioned to weather the changes and continue serving the needs of the British public.