Full Breakdown
Migration Policy Shift Could Raise UK Borrowing by Up to £4 billion
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Core Forecast and Fiscal Implications
Helen Miller, director of the Institute of Fiscal Studies (IFS), warns that a downward revision of net migration in the Office for Budget Responsibility’s (OBR) forecast could increase public-sector borrowing by £1 billion to £4 billion in the 2029-30 tax year. She argues that fewer migrants would lower tax receipts while the OBR’s current model treats department budgets as fixed and assumes modest benefit costs. An earlier OBR estimate suggested that 200,000 fewer arrivals per year would add roughly £20 billion of extra annual borrowing within five years.
Recent Migration Trends
Office for National Statistics (ONS) data show net migration falling to 171,000 in the year to December 2025, down from 331,000 the previous year. Earlier projections had expected net migration to average 235,000 a year to 2030, but the ONS now forecasts a longer-term level of around 230,000 a year from 2027 onward. The sharp decline follows a peak of nearly 872,000 in 2022, when annual net migration rose from roughly 800,000 before the Covid-19 pandemic to more than 1.4 million in 2023.
Official Responses
Miller has called on the OBR to make the fiscal impact of migration policy more transparent, saying that clearer modelling would enable external scrutiny of government choices. Chancellor John Healey faces limited fiscal headroom ahead of his budget statement scheduled for October 28, with higher gilt yields already eroding the £23.6 billion borrowing allowance.
Verbatim Quotes
- “The effect of migration on the public finances is complicated. It depends not just on how many people arrive, but on what they do when here and how long they stay. A graph showing the UK's annual net migration | PA Ms Miller is sounding the alarm over a fall in tax revenues as a result of lower migration | GETTY / IFS” — The Financial Times
What’s Next
The upcoming budget on October 28 will be the first major fiscal statement after the latest migration data, and analysts expect the Treasury’s borrowing projections to be closely examined in light of Miller’s concerns.