LABOUR’S crackdown on migration will shrink the UK economy, making tax rises and spending cuts more likely, expert analysis has found.
Earlier this month, Prime Minister Keir Starmer drew furious comparisons to the racist 20th-century Tory politician Enoch Powell after he claimed the UK was becoming an “island of strangers” in a speech in which he also outlined plans to tighten migration rules.
The Labour leader outlined measures including ending all visas for care workers, extending the wait to apply for settlement or citizenship from five years to 10, introducing higher English standard tests, and a cut in the amount of time foreign students at UK universities can stay after graduating.
The Home Office said that the changes could reduce the number of people coming to the UK by up to 100,000 per year — while Starmer dismissed concerns that doing so would negatively impact the UK economy.
However, analysis from Bloomberg Economics has now projected that the measures will in fact cut UK GDP by 0.6% by 2029/30.
Tax revenues would also drop by around £9 billion per year, the analysis further found.
It comes despite Labour having repeatedly made clear that economic growth is their first priority.
“Labour’s turn to the right on migration may be seen as politically savvy. In time, it might also ease the demands on housing and public services.
“In the near term, however, the most obvious consequences of tighter migration controls could well be more difficult decisions on tax and spending.”
The news comes after First Minister John Swinney said that Labour's immigration stance poses a “critical economic threat” to Scotland.
“I made this point to the Prime Minister when I met him on Friday — that the changing dynamics of our labour market and the need for us to encourage migration to support our working age population has to be recognised in the approach that is taken to migration in the United Kingdom," the SNP leader said.
Earlier in May, figures from the Office for National Statistics showed the biggest fall in net migration since the pandemic. The figure stood at an estimated 431,000 in the year ending December 2024, down 49.9% from 860,000 a year earlier.
The biggest drop in terms of numbers was seen in non-EU nationals coming to the UK for work – this fell by 108,000, which was a 49% fall in the year ending December 2024.
The Migration Observatory at the University of Oxford said at the time that the “record-breaking decline” in net migration was possible “primarily because numbers had previously been so high”.
Its director, Dr Madeleine Sumption, said the economic impact of the fall “is actually likely to be relatively small” because “the groups that have driven the decline, such as study and work dependants, are neither the highest skilled, highest-paid migrants who make substantial contributions to tax revenues, nor the most disadvantaged groups that require substantial support”.
