Overview
- NIESR released its latest outlook as official data show net migration fell to 204,000 in the year to June, raising the prospect of reaching net zero before decade’s end.
- Under a no‑net‑migration scenario, the UK economy would be 3.6% smaller by 2040 and the budget deficit would be roughly 0.8% of GDP higher, or about £37 billion.
- The workforce would be around 2.5 million smaller by 2040, reducing tax receipts and forcing higher taxes or spending cuts to prevent persistently higher borrowing.
- NIESR estimates income per person would be about 2% higher, yet it judges the scenario fiscally unsustainable and urges lowering public debt to create fiscal headroom.
- In its broader forecast, NIESR trims 2025 growth to 1.4%, expects unemployment to peak near 5.5% in late 2026, and projects Bank of England rates at about 3.25% by end‑2026.