UK considers cutting visa fees for highly skilled as US hikes H-1B prices

The UK government is considering a proposal to abolish visa fees for leading scientists, academics, and digital experts as part of its drive to stimulate economic growth. The potential move comes in the wake of the US’ recent decision to impose a $100,000 fee on new H-1B visas, a programme widely used by American technology firms.

According to the Financial Times, prime minister Keir Starmer’s “global talent task force” is deliberating about options that could include waiving visa costs entirely for individuals who have attended the world’s top five universities or received prestigious awards.

“We’re kicking around the idea of cutting costs to zero,” an official told the FT.

Currently, the UK’s global talent visa costs £766 per applicant, with partners and children subject to the same charge. Applicants are also typically required to pay an annual health surcharge of £1,035. Introduced in 2020, the visa route targets internationally recognised leaders in fields such as science, engineering, humanities, medicine, digital technology, and the arts.

In the year ending June 2023, the number of global talent visas granted rose by 76%, reaching a total of 3,901. Officials involved in the discussions on visa reforms noted that the US’ recent visa fee hike had provided momentum for those advocating for change in the UK’s visa system.

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“Trump’s decision had put wind in the sails of those wanting to reform Britain’s high-end visa system to boost growth ahead of the November 26 budget,” a source told the FT.

The decision to introduce the $100,000 fee for new H-1B visa applications in the US was part of a broader immigration crackdown under the Trump administration, which many economists warn could harm the US economy.

Atakan Bakiskan, an economist at Berenberg Bank, described the move as a classic example of “anti-growth policymaking.”

Bakiskan said: “Deportation efforts, attempts to strip work permits from existing employees, and a hostile environment for foreign workers have already caused labour force growth in the US to nearly flatline. With the new H1B policy, the labour force is more likely to shrink than expand, going forward.

“The future of economic growth now depends almost exclusively on productivity gains. However, by making it very expensive for companies to attract foreign talent, and by forcing some international students to leave the country after graduation, the brain drain will weigh heavily on productivity.”

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Berenberg has since revised its estimate for US trend growth downwards, from 2% at the start of the year to 1.5%. Bakiskan warned that if the policy remains in place, “the 1.5% forecast may soon look optimistic,” adding: “Taken together, the erosion of trust in institutions, a loss of human capital, tariffs, chronic uncertainty, and unsustainable fiscal policies can raise the tail risk of a financial crisis in the US. In the long run, they may set a path for an even weaker dollar and higher long-term yields.”

Despite the potential drawbacks, Bakiskan did admit that the US economy could still grow without job creation but at a much slower pace, with an increased risk of stagnation or recession.

Kathleen Brooks, research director at XTB, noted that the new visa fee could particularly impact large technology firms in the US, such as Amazon (AMZN), which employs thousands of people on H-1B visas.

“The new policy is now in effect, and it may impact the mega-cap tech stocks who employ thousands of people on H-1B visas. Amazon has the highest number, closely followed by Microsoft (MSFT), Meta (META), Apple (AAPL) and Google (GOOG),” she said.

“Although these companies have the money to afford the visas, other sectors who also rely on H-1B visas may struggle with future recruitment, for example, the healthcare and education sectors.”

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