What's happened
Recent official figures show UK net migration fell sharply to 204,000 in 2025, raising concerns about long-term economic growth and public finances. Think tanks warn that sustained zero migration could shrink the workforce, reduce tax revenues, and increase borrowing, potentially leading to a 3.6% smaller economy by 2040.
What's behind the headline?
The decline in UK migration signals a fundamental shift in the country’s demographic trajectory. The NIESR warns that if net migration reaches zero, the UK’s economy will be 3.6% smaller by 2040, primarily due to slower employment growth and a shrinking working-age population. While short-term productivity gains may occur as firms adapt to a smaller workforce, these are offset by long-term fiscal challenges. Reduced tax revenues will necessitate higher taxes or borrowing, risking increased public debt. The forecast underscores the importance of migration in maintaining economic stability and highlights the potential consequences of restrictive immigration policies. The UK’s lack of institutional capacity to support higher debt levels, unlike Japan, makes this scenario particularly concerning. Policymakers must weigh the economic costs of migration restrictions against political objectives, as continued decline could hamper growth and strain public finances, especially if fertility rates do not rise.
What the papers say
The Guardian reports that a sharp fall in net migration to 204,000 in 2025 could make the UK economy 3.6% smaller by 2040, with slower employment growth and lower tax revenues. The Independent emphasizes that this decline would increase the government’s borrowing needs, raising the budget deficit by approximately £37 billion. Both sources agree that sustained zero migration is fiscally unsustainable without significant tax hikes. Conversely, Business Insider UK highlights that some investors see potential in international stocks, suggesting that global diversification could mitigate domestic demographic risks. David Kelly from JP Morgan notes that international markets are undervalued and that US investors are underexposed to foreign equities, which could benefit from the UK’s demographic challenges if they lead to a cautious approach to domestic markets. The contrasting perspectives reflect a broader debate: while policymakers face the economic fallout of migration restrictions, investors see opportunities in international markets as a hedge against domestic demographic decline.
How we got here
The UK’s population growth has been driven by migration, birth rates, and deaths. Recent government measures and tightening of visa requirements have sharply reduced legal migration, with official figures showing a 69% drop in net migration in 2025. This decline, combined with stable birth and death rates, suggests the population may plateau or decline, impacting the workforce and public finances over time.
Go deeper
Common question
-
What Happens to the UK Economy if Migration Stops?
Recent figures show a sharp decline in UK migration, raising concerns about the country's economic future. If migration were to halt completely, what would happen to jobs, public services, and government finances? Below, we explore the key questions and potential impacts of a zero-migration scenario on the UK economy.
-
What Are the Major Global Conflicts Right Now?
With ongoing conflicts around the world, it's crucial to stay informed about the major hotspots and their impact. From civil wars to geopolitical tensions, understanding these conflicts helps us grasp the bigger picture of global stability. Below, you'll find answers to common questions about current conflicts, their causes, and what might happen next.
-
What Are the Biggest Risks and Opportunities for the Global Economy Today?
The global economy faces a complex mix of threats and chances. From geopolitical conflicts to demographic shifts, understanding these factors can help investors, policymakers, and everyday people prepare for what’s ahead. Below, we explore the key risks and opportunities shaping the economic landscape now and in the near future.
-
What Are the Most Urgent Humanitarian Crises Today?
With ongoing conflicts and natural disasters worldwide, understanding the most pressing humanitarian crises is crucial. From civil wars to famine, these emergencies demand immediate attention and action. Below, we explore the key crises happening now, how countries are responding, and what the global community can do to help those in need.
-
How Does Climate Change Fuel Conflicts and What Can Be Done?
Climate change is increasingly linked to conflicts around the world, from civil wars to regional violence. Rising temperatures, droughts, and resource shortages can escalate tensions and trigger violence. But which regions are most vulnerable, and what steps can be taken to prevent climate-driven conflicts? Explore the answers below to understand this complex issue better.
More on these topics