Cutting net immigration to zero would boost living standards in the short term but ultimately prove “financially unsustainable” and make the UK economy smaller, public finances weaker and the deficit permanently higher, a new analysis says.
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 percent by 2040 and reduce the labor force by around 2.5 million people compared to current forecasts. The result, it is argued, would be a £37 billion deterioration in public finances unless this is offset by higher taxes or cuts in public spending.
The findings come amid new evidence that net migration has already fallen sharply. Preliminary estimates suggest that net immigration fell to around 200,000 in 2025, the lowest level since 2012 (excluding the pandemic), following the introduction of stricter visa rules for students and workers by the previous Conservative government and further restrictions on care workers abroad under the Labor Party.
This decline has fueled speculation among population experts that net immigration could approach zero in the coming years. This would mark a dramatic turnaround after net immigration rose to over 900,000 in 2023, the highest level on record, and also saw historically high inflows in 2022 and 2024.
NIESR said that in a scenario where net migration falls to zero, income per person would increase by about 2 percent in the long run as fewer workers would mean greater access to capital and equipment, increasing individual productivity. However, these gains would not be sustainable without fiscal interventions.
“The zero net migration scenario is fiscally unsustainable,” the institute said, arguing that weaker growth would ultimately force governments to raise taxes or cut spending to stabilize debts. In contrast, positive net migration offers an “easier path to fiscal sustainability” by supporting growth and the tax base.
According to the institute’s modelling, the UK population would stabilize at around 70 million by 2030 if net migration were eliminated, compared with a rise to around 74 million by 2040 according to projections from the Office for National Statistics.
In addition to its migration analysis, NIESR updated its broader economic outlook. It expects inflation to fall below the Bank of England’s 2 percent target in April and remain close to that level for the rest of the year. As a result, two rate cuts are forecast in 2026, taking the key interest rate down to 3.25 percent from 3.75 percent, although markets expect rates to remain unchanged at this week’s MPC meeting.
Economic growth is forecast at 1.4 percent this year, slightly below the 1.5 percent forecast in November, before slowing to 1.3 percent in 2027 and 1.1 percent in 2028. NIESR said part of this slowdown reflects the impact of tax increases announced by Rachel Reeves, which are expected to weigh on demand in the medium term.
The institute’s conclusion is clear: while reducing migration could be politically attractive and provide a temporary boost to incomes, eliminating net migration entirely would entail significant economic and fiscal costs that the UK would find difficult to absorb without difficult compromises.
