Zero Migration Could Shrink UK Economy, Warns Thinktank
A leading UK thinktank has warned that the country’s economy would shrink sharply if net migration fell to zero. According to new research, the UK economy could be 3.6% smaller by 2040, which would create a much larger budget deficit and likely force the government to raise taxes.
The National Institute of Economic and Social Research (NIESR) said that low birth rates and a recent sharp fall in migration have raised serious concerns about the future size of the UK workforce and population. The thinktank examined what could happen if net migration stayed at zero for the rest of this decade and beyond.
Net migration refers to the number of people moving to the UK minus those leaving. While the UK has relied on migration to support population growth for many years, recent policy changes and demographic trends suggest this may no longer be the case.
Population Growth Would Stop
In NIESR’s zero-migration scenario, the UK population would stop growing altogether. Researchers estimate that the population would level off at around 70 million by 2030. Official data shows the UK population stood at 69.3 million in 2024, meaning future growth would be minimal.
Dr Benjamin Caswell, a senior economist at NIESR, said that without migration, population growth would stall, and the workforce would grow much more slowly.
“Zero net migration would leave the UK economy 3.6% smaller by 2040,” Caswell said. “This is mainly because there would be fewer people in work and a smaller labour force overall.”
Short-Term Gains, Long-Term Pain
At first, the impact of zero migration may appear positive for some workers. NIESR said that businesses would face labour shortages, which could push them to invest more in machinery, technology, and automation. As a result, productivity per worker could increase.
Because of this, real wages and household incomes could rise in the short term. The thinktank estimates that GDP per person could increase by about 2% by 2040 under this scenario.
However, these early gains would not last. Over time, the overall economy would grow more slowly because there would be fewer people working, earning, and paying taxes.
Ageing Population Creates Fiscal Pressure
One of the biggest risks highlighted by NIESR is the impact of an ageing population. With fewer young people entering the workforce and more older people retiring, government spending would rise while tax income would fall.
Caswell explained this situation with a simple image. “Imagine freezing the population at its current size and then letting it age year after year,” he said. “In the short to medium term, the damage is limited. But over 20 years, the gap between what the government spends and what it collects in taxes gets larger and larger.”
As the number of older people increases, the government would have to spend more on pensions, healthcare, and social care. At the same time, fewer workers would be paying income tax and national insurance.
Budget Deficit Could Rise by £37bn
NIESR estimates that the government would be forced to borrow more money to cover this growing gap. By 2040, the budget deficit could rise by about 0.8% of GDP, which equals roughly £37 billion.
This forecast assumes that government tax and spending plans up to 2030 follow current estimates from the Office for Budget Responsibility (OBR). After that, the share of public spending relative to GDP is assumed to stay the same.
Some government payments, such as child benefit or jobseeker’s allowance, would naturally change as the population changes. However, NIESR said that most government spending — including public services and investment — would not fall significantly.
Tax Rises Likely Without Migration
Caswell warned that unless birth rates increase significantly, a zero-migration policy would be difficult to maintain financially.
“If the fertility rate does not recover,” he said, “zero net migration would not be sustainable for the UK without large tax increases. And large tax rises could slow down economic growth.”
In other words, the government would face tough choices: raise taxes, cut spending, or borrow heavily — each with serious economic consequences.
Migration Has Already Fallen Sharply
The warning comes after a steep drop in net migration figures. In the year to June 2025, net migration fell from 649,000 to 204,000. This decline followed tighter work visa rules introduced by the previous Conservative government.
NIESR also noted that new policies under the Labour government, especially changes related to recruiting overseas workers in health and social care, could reduce migration even further.
At the same time, the thinktank pointed out that births and deaths in the UK have been roughly equal since the early 2020s. This means migration is now the main driver of any population growth.
Without it, the UK risks entering a period of economic stagnation, rising public debt, and increasing pressure on workers and taxpayers.
Long-Term Risks for the UK Economy
The NIESR report highlights how closely linked migration, population growth, and economic stability are. While reducing migration may appeal politically, the economic costs could be significant over the long term.
A smaller workforce, slower growth, higher borrowing, and possible tax rises could all result from a zero-migration policy. The thinktank’s analysis suggests that without migration — or a sudden rise in birth rates — the UK’s economic future could become far more challenging in the decades ahead.
Published: 4th February 2026
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