NIESR Warning: Halting Net Migration Could Trim UK GDP by About 4% by 2040

The National Institute of Economic and Social Research has modelled a policy scenario in which net migration is reduced to zero and concluded the policy would leave the British economy materially smaller by 2040. The core channel is demographic: fewer incoming workers slows labour force expansion, tightening capacity for growth and investment. That squeeze is not evenly distributed; sectors that rely heavily on migrant labour — health and social care, construction, hospitality and parts of tech — are likely to feel amplified disruption. Employers may respond with higher wages and automation, but those adjustments take time and can depress competitiveness and output in the interim. Fiscal effects are mixed in the model: while lower migration can reduce pressure on some local services, it also narrows the tax base and raises per-capita public spending needs as the population ages. The projection of an approximate 4% GDP shortfall by 2040 is modest in headline terms but significant given the cumulative nature of foregone output and productivity spillovers. Policymakers face a trade-off between migration control as a political promise and the economic costs of slower growth and tighter labour markets. The report underscores that migration is a lever for managing long-term labour supply and that abrupt changes carry adjustment costs beyond headline employment figures. Mitigation would require targeted training, stronger investment in automation, and fiscal measures to support affected sectors, but those responses are costly and slow. The modelling also highlights distributional risks: regions and income groups tied to migrant-intensive industries may endure sharper local shocks. International comparisons suggest that complementary policies — flexible migration regimes, skills pipelines and regional investment — can blunt negative growth effects. The analysis should not be read as an argument for unregulated migration; rather, it frames migration as an economic parameter that interacts with labour markets, public finances and technological change. In short, setting net migration to zero is likely to shrink the size of the economy over the next two decades unless offset by substantial and sustained policy interventions.