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Brexit could harm growth of 'flat white economy', report warns

Britain must secure EU migrant talent post-Brexit or risk losing the near-10% of growth fuelled by the burgeoning "flat white economy", according to a report.

The Centre for Economics and Business Research (CEBR) warned Brexit could halt the "life-blood" helping drive the so-called flat white economy of creative and technology businesses unless the Government can maintain the flow of EU migrant workers.

It said Brexit negotiations need to start by offering guarantees to existing EU migrants already in the country before ensuring post-Brexit migration arrangements to allow the UK's digital businesses to keep growing.

The flat white economy sector grew by 9.8% to reach 9.7% of the UK's gross domestic product (GDP) in 2016, making it the second single largest sector of the whole economy behind construction, according to the CEBR.

Without the sector, GDP growth would have been a paltry 0.9% last year rather than the 1.8% recorded, it added.

Migrant workers are key to its growth, with the CEBR estimating nearly 40% of the increase in employment in the sector since 2008 had reflected EU migrants compared with 28% for the wider City of London.

CEBR president Douglas McWilliams, author of The Flat White Economy, said: "T he critical need is to guarantee the position of existing migrants from elsewhere in the EU.

"Without certainty their lives are complicated - they will have difficulty getting mortgages or even in some cases signing long rental leases. Without a guarantee, many will start to look elsewhere.

"The next step is to ensure that the post-Brexit migration arrangements allow a sufficient flow of talent for the UK's digital businesses to keep growing."

The CEBR has previously been vocal in warning the flat white economy would be dealt a "body blow" if curbs on EU immigration were introduced.

It said the sector has seen its share of GDP increase by a fifth since 2011 but has very different needs to other parts of the economy.

The sector does not have the same need for large office blocks in central London or the City and its businesses tend to be smaller and more flexible , instead focusing on encouraging staff retention, according to Mr McWilliams.

This means they are "footloose and if their growth is stunted they will move elsewhere", he cautioned.

" The sector has already played an important role in preventing Brexit from leading to an economic downturn. Now the Government needs to return the favour to the sector," he added.

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