Migration policy from Labour could hurt UK economic growth, shocking OBR report warns

The fiscal watchdog now anticipates an annual average of 235,000 people arriving on a net basis between 2026 and 2030, a notable decrease from the 295,000 figure projected last November.

This downward revision stems primarily from growing numbers of British citizens choosing to relocate abroad, according to the OBR.

By the end of the decade, the adult population is expected to be approximately 200,000 lower than the November forecast suggested. A reduced working-age population will constrain labour supply growth over the next four years, the forecaster warned.

In its report, the independent watchdog stated: "Aggregate potential output growth is therefore marginally lower than in November, by 0.1 percentage points a year on average."

Furthermore, the organisation noted that potential output levels would sit 0.25 percentage points below previous estimates by 2030 from the OBR's last report in November 2025.

The OBR noted that potential output serves as the foundation for projecting economic expansion in the medium term. However, the forecaster acknowledged considerable uncertainty remains regarding how diminished migration flows might affect productivity and living standards.

Proposed migration policy changes concerning indefinite leave to remain and asylum were excluded from calculations as they remain under review by the Home Office.

Helen Miller, the director at the Institute for Fiscal Studies, emphasised that migration projections would prove "particularly significant" within the wider economic picture.

She said: "It was revised downwards today to reflect higher levels of outwards migration by UK nationals; it could shift downwards again if the numbers for inwards migration get revised down."

Ms Miller suggested further reductions to net migration remained plausible if Labour ministers continue to prioritise reducing overall numbers, stating: "That's entirely possible, not least because bringing down net migration is explicit government policy."

Earlier this week, Home Office Secretary Shabana Mahmood unveiled plans to dramatically reduce refugee numbers, with official status to be reviewed ervery 30 months.

Ms Mahmood said: "This country will always provide sanctuary to those fleeing war and persecution. But we must also ensure our asylum system is not creating pull factors that draw people on dangerous journeys across the world, fuelling and funding the human traffickers.

"Genuine refugees will find safety in Britain, but we must also reduce the incentives that draw people here at such scale, including those without a legitimate need for protection.

"So, once a refugee’s home is safe and they are able to return, they will be expected to do so. This is a firm but fair approach, restoring order and control of Britain’s borders, while protecting those fleeing war and repression."