Box D: The Economic Implications of Net Zero Migration

Immigration has been a mainstay issue in British political debate for the last two decades, with discussions of its economic effects featuring prominently. Its importance is likely to grow as the domestic fertility rate continues to fall. Population change in the United Kingdom is now driven predominately by net migration rather than natural change (births minus deaths), with important macroeconomic implications through its effects on labour supply. This box assesses the economic implications of alternative migration paths. We compare our baseline forecast, which follows the ONS population projections, with a scenario in which net migration and natural change both taper to zero, leaving the population broadly stable at around 70 million by the end of the decade. While net zero migration raises GDP per capita through higher capital intensity, we find that it leads to weaker headline GDP growth and a significantly worse fiscal position over time.