NIESR warns UK migration drop could cause a £37bn deficit by 2040, pushing taxes up. Britain’s oldest independent econ research institute.
Recent policy measures, including tax hikes and minimum wage increases, have raised hiring costs for UK businesses, especially affecting sectors with lower wages like hospitality. Data shows firms are slowing hiring, leading to higher youth unemployment and sector instability, with concerns over future growth and business viability.
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.
UK inflation has accelerated to 3.3% in March, driven by higher fuel prices due to the Iran war. The UK labour market shows signs of softening, with unemployment falling to 4.9%, but wage growth remains subdued. The Bank of England is monitoring these trends closely as it prepares for upcoming policy decisions.