Brexit will trigger a major reduction in net migration, a Cambridge University study has predicted.

If immigration controls on EU nationals were imposed in mid-2019, there would be zero net migration between the UK and the continent as inflows and outflows would balance each other out, the university's Centre for Business Research forecast.

The report said this would reduce overall annual net migration to Britain to 165,000 from 2020, about half the current figure.

However, this would still be above the Government target of reducing net migration to the tens of thousands level per annum.

The study brands the pre-referendum forecasts by the Treasury - which were dubbed part of “operation fear” by the Leave side - as having “little basis in reality”.

The Cambridge survey predicts that while inflation will be higher, unemployment rates will be lower, the housing crisis will ease, and average earnings will rise by two per cent, partly due to lower migration levels.

“Our equations for earnings suggest that earnings will rise by more than 2% as employment rates reach a peak in 2017 and especially as migration reduces from 2019.

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“The UK labour market has become very dependent on foreign-born labour with the increase in foreign-born workers being equivalent to over 80% of additional employment since 2004. Immigration restrictions will provide the biggest shock to wage bargaining for over a decade,” the report states.

The study finds that the dramatic fall in Sterling would have happened anyway, but over a longer period of time.