I don't think it would help that much, really. In the first place this isn't exactly a problem unique to the English Premier League. A glance at the squad of Bayern Munich, German Bundesliga champions, and while it's mainly German some of the star players are Franck Ribery (France), Arjen Robben (Netherlands) and Mandzukic of Croatia; while Real Madrid's squad includes Gareth Bale (Wales), Christiano Ronaldo, Pepe and Coentrao (Portugal), Benzema (France), Luka Modric from Croatia... All football teams across the world have players from across the world, not just the UK. Foreign players in the Premier League itself is not the problem. Indeed, barring them from the league would see quality drop while probably not benefitting the remaining English players -- after all, playing against the best can raise your own standards too.
The simple truth, then, is that we don't have a squad that's good enough to compete on the World stage at the moment. Turning the Premier League into a glorified Sunday league won't change that.