Τhe UK economy doesn’t have an immigration problem, but it’s people do
While the British are arguing about immigration as if the numbers are rising, the reality is exactly the opposite.
Entry routes have narrowed, salary thresholds have climbed and visa approvals have fallen sharply. Employers are recalculating hiring plans. Universities are revising budgets. The political heat remains high, but the underlying numbers are moving in the opposite direction.
Every developed economy requires a healthy level of immigration, so what needs to be asked is whether the UK economy can carry the weight on its own.
How big was the surge and how sharp is the reversal?
The scale of the move is hard to overstate. From June 2021 to June 2025, total immigration reached 5.6 million and net migration 2.7 million.
Source: The Guardian
The post pandemic period saw inflows accelerate as labour shortages intensified and visa rules were loosened.
Under Boris Johnson’s government, skilled worker routes expanded, and care providers recruited heavily from abroad.
By 2023, net migration reached 944,000 in the year to March. But policy has tightened a lot since then.
Salary thresholds for skilled worker visas rose from £26,200 to £38,700. Work and family visa thresholds increased to £33,400.
Care workers were banned from bringing dependents. Most postgraduate students were barred from bringing family members.
The result is obvious in the numbers as non-EU inflows are expected to drop below 550,000 in 2026, while emigration rises as temporary visa holders leave.
If forecasts prove accurate, net migration could fall to around minus 60,000 this year. That would be the first negative reading since 1993.
Did the population really explode?
Public debate has often relied on exaggerated numbers. The UK population was 66.7 million in mid 2020 and is provisionally estimated at about 69.5 million in mid 2025. The increase is roughly 2.7 million and not 12 million as some high-profile figures like Sir Jim Ratcliffe have claimed.
However, migration drove almost all of that growth. Analysis by the Migration Observatory at the University of Oxford shows that between 2020 and 2023, net migration accounted for 98% of population growth. Births contributed little.
For investors, the key point is demographic. The UK has relied on migration to stabilise its working-age population. Remove that inflow, and labour force growth slows.
The demographic arithmetic changes quickly.
Why does public concern remain so high?
A 2025 global survey by Gallup found that 21% of Britons name immigration as the country’s top problem. For comparison, the global median is 1%. No other country ranks it first.
Source: Gallup
Supporters of Reform UK show the strongest intensity, with 48% citing immigration as the main issue. Yet surveys also show that around 80% of Britons view immigrants as a good thing and are comfortable with them as neighbours.
Concern appears tied less to migrant share, which stands at around 17% of the population, and more to politics and perception.
Even as net migration has fallen by roughly 78% from its peak, anxiety has not faded at the same pace.
This creates tension for policymakers. While the political reward for reducing migration is immediate, the economic cost emerges later.
What does zero migration mean for growth?
The National Institute of Economic and Social Research modelled a scenario in which net migration falls to zero. By 2040, it estimates GDP would be 3.6-3.7% lower than under current projections.
Public borrowing would be £37 billion higher in today’s prices. Trend growth would fall by 0.2% points a year.
The mechanism is straightforward. A smaller workforce reduces employment growth. Tax receipts decline. Age-related spending pressures remain. Over time, the deficit widens.
The nuance is that although in the short term, fewer workers can push real wages higher and lift GDP per capita, the long-term aggregate output falls.
For debt sustainability, total GDP matters more than per capita figures.
The Office for Budget Responsibility has previously estimated that Brexit will leave the economy around 4% smaller in the long run.
The magnitude of a zero migration scenario is comparable.
Where is the squeeze already visible?
Universities provide an early signal. Some international students are now paying more than £30,000 for a one-year master’s degree.
Restrictions on dependents and higher salary thresholds for post-study work have reduced applications. Financial strain is emerging, with institutions exploring mergers and cost-cutting.
Health trusts and care homes, which relied heavily on overseas recruitment, face a tighter labour supply.
Construction firms report similar constraints. Surveys note that only 13% of firms use the immigration system, yet for those that do, it fills urgent vacancies.
Fiscal implications follow. If net migration undershoots official forecasts by around 200,000 people in a given year, economists estimate a £6-8 billion shortfall in public finances.
Recent migrants tend to be of working age and, according to HMRC data, often earn above-average wages.
Restricting skilled visas reduces the number of high earners contributing to the tax base.
Is this permanent or a temporary dip?
The Migration Observatory expects net migration to fall sharply in the short term, perhaps to around 250,000, before recovering toward 340,000 later in the decade.
Many migrants currently on temporary visas may remain. Labour demand may strengthen. Demographic pressures do not disappear.
International comparison is instructive. Germany is expanding routes for foreign apprentices and workers to offset an ageing population.
The UK is moving toward a more restrictive model with fewer paths to permanence.
Both approaches carry political risk, but only one increases the working-age population.
What remains to be seen is whether a lower inflow can coexist with modest growth, tight public finances, and an ageing society.
Britain has already delivered one of the fastest migration reversals in the developed world.
The next few years will show whether that correction leaves a smaller economy behind or simply a different one.
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