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Zero migration shrinks the economy
The Collapse
Restrictive government policy reforms have collapsed immigration since the 2023 peak. Demographers and economists expect net migration to reach zero or even turn negative over the next couple of years.
The Shock Absorber
Britain has become dependent on immigration as a shock absorber. It keeps universities funded, farms staffed, and hospitals running while an unstable, increasingly polarized government mulls harder reforms to training, wages, housing, and productivity.
Slow Reforms
Those reforms take years, while the workers, tuition fees, and tax revenues disappear immediately. Cuts to net migration may eventually create a stronger need for government and businesses to train more workers and improve incentives for currently unattractive jobs.
Why would less migration make GDP smaller?
GDP is roughly the number of workers multiplied by the output of each one. If fewer people arrive and the number of workers stops growing, total output grows more slowly. Britain's Office for Budget Responsibility has published scenarios showing that lower migration reduces both GDP and tax receipts. Because migrants are concentrated in working ages, the effect on the workforce is larger than their share of the population suggests.
Why does an aging country need young workers?
The UK state pension is funded on a pay-as-you-go basis, which means today's pensions are paid out of the National Insurance contributions and taxes collected from today's workers. When the number of retirees grows faster than the number of workers, each worker supports more pensioners. Health spending also climbs with age, since older people use hospital care much more. Younger migrants arrive in working years, so they add to the contributor side of this equation.
How have other aging countries handled shrinking workforces?
Japan's population peaked at around 128 million in about 2008 and has fallen since. The country has relied more on automation, higher participation by women and older people, and a gradual expansion of foreign worker programs than on large-scale immigration. Its workforce has shrunk for years, which has led to labor shortages in sectors such as care and construction. South Korea and several European countries are watching similar patterns in their own birth rates.
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