Cutting net migration to zero would deliver a short-term boost to living standards but ultimately prove “fiscally unsustainable”, leaving the UK economy smaller, public finances weaker and the deficit permanently higher, according to new analysis.
The warning comes from the National Institute of Economic and Social Research (NIESR), which said a zero net migration policy would shrink the economy by 3.6 per cent by 2040 and reduce the workforce by around 2.5 million people compared with current forecasts. The result, it argues, would be a £37bn deterioration in the public finances unless offset by higher taxes or cuts to public spending.
The findings land amid fresh evidence that net migration has already fallen sharply. Preliminary estimates suggest net migration dropped to around 200,000 in 2025, the lowest level since 2012, excluding the pandemic period, following tighter visa rules for students and workers introduced by the previous Conservative government and further restrictions on overseas care workers under Labour.
That fall has fuelled speculation among population experts that net migration could approach zero in the coming years. This would mark a dramatic reversal after net migration surged to more than 900,000 in 2023, the highest level on record, with 2022 and 2024 also seeing historically high inflows.
NIESR said that in a scenario where net migration falls to zero, incomes per person would rise by around 2 per cent over the long term, as fewer workers would mean greater access to capital and equipment, boosting individual productivity. However, those gains would not be sustainable without fiscal intervention.
“The zero net migration scenario is fiscally unsustainable,” the institute said, arguing that weaker growth would eventually force governments to raise taxes or cut spending to stabilise debt. By contrast, it said positive net migration offered a “more straightforward route to fiscal sustainability” by supporting growth and the tax base.
Under the institute’s modelling, the UK population would stabilise at around 70 million by 2030 if net migration were eliminated, compared with rising to about 74 million by 2040 under projections from the Office for National Statistics.
Alongside its migration analysis, NIESR updated its wider economic outlook. It expects inflation to fall below the Bank of England’s 2 per cent target in April and remain close to that level for the rest of the year. As a result, it forecasts two interest rate cuts in 2026, taking the base rate down to 3.25 per cent from 3.75 per cent, although markets expect rates to be left unchanged at this week’s MPC meeting.
Economic growth is forecast at 1.4 per cent this year, slightly below the 1.5 per cent projected in November, before slowing to 1.3 per cent in 2027 and 1.1 per cent in 2028. NIESR said part of that moderation reflects the impact of tax rises announced by Rachel Reeves, which are expected to weigh on demand over the medium term.
The institute’s conclusion is stark: while cutting migration may appeal politically and offer a temporary lift to incomes, eliminating net migration altogether would come at a significant economic and fiscal cost that the UK would struggle to absorb without difficult trade-offs.
