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on May 21, 2025
Read Time: 7 Minutes
The question of the financial contribution that those who migrate to the UK make to the national economy, is one that is frequently asked – and intensely contested.
One thing that shouldn’t be in doubt is that migrants do, indeed, contribute significantly to the UK economy. They do so in a variety of ways, such as by filling skills gaps, running their own businesses, and often paying more in taxes than they receive in benefits.
Unfortunately, anti-immigration sentiment has become widespread in certain quarters in recent years. Such opinions are often accompanied – and fuelled – by inaccurate and misleading claims, such as that most migrants in the UK cost the taxpayer. It is therefore sadly necessary for us to delve further into the question of the meaningful contributions that migrants do make to “UK plc”. Along the way, however, there are opportunities for us to touch on the various fascinating nuances and complexities of this topic.
As pointed out by The Migration Observatory at the University of Oxford, there are difficulties in trying to estimate the exact contribution or cost of migrants to the UK’s public finances, because so much depends on the exact methods that analysts use.
Notwithstanding these variations in methods, according to the same source, “studies typically find that the fiscal impacts of migration represent less than 1% of GDP.”
Below are some of the specific ways in which migration contributes to the UK economy:
Amid labour shortages in such sectors as healthcare, construction, and technology, foreign nationals help fill these gaps when they come to the UK to work. Migrants are often willing to take on jobs that UK-born workers may not be as interested in pursuing.
Research has indicated that migrants in the UK tend to contribute more in taxes than they receive in benefits, thereby delivering a net positive impact on the public finances. This, in turn, helps drive down deficits and the public debt.
Overseas nationals who come to the UK bring the potential of higher GDP, given how they increase the size of the country’s labour force.
They don’t merely do this by pursuing salaried employment in the UK with existing employers. That’s because many migrants are also highly entrepreneurial, with the businesses that they start helping to create jobs and drive innovation and economic growth.
Extensive research has helped shed light on the economic implications of migration to the UK:
It is common on social media to see eyebrow-raising, one-sided claims about migrants’ impact on the UK public finances, such as that “95% of migrants are a cost to the taxpayer”.
As The Migration Observatory has pointed out, it is crucial, too, to understand the distinction between “static” and “dynamic” studies into migrants’ economic impact:
It is dynamic studies that tend to provide the more positive readings of migrants’ net fiscal contribution to the UK, than their static counterparts.
In a situation of immigration to the UK suddenly stopping, the exact impacts of this would depend on such factors as the timeframe, specific industry sectors, and Government policy responses to the resultant shortfall in foreign-national workers.
Here, however, are some of the specific impacts that likely could be expected:
As of 2023, it was reported that around a fifth of NHS staff claimed a nationality other than British. So, in the absence of immigration, hospitals and other health-service facilities would face more intense staffing crises. This, in turn, would heighten wait times and drive down the quality of patient care.
Such industries as construction, agriculture, tech, and finance have also long depended on the talents of foreign nationals.
So, migrants not being accessible to employers in these fields could bring impacts such as slower housing and infrastructure developments, and the UK losing its international competitiveness in the tech and finance sectors.
As we have touched on throughout this article, there is a high level of uncertainty involved in attempting to assess the economic impacts of migrants (or a lack of migrants). Estimates are subject to variation, depending on the specific methods used by analysts.
However, in light of the great dependence the aforementioned industries have on overseas nationals, it has been suggested that an absence of migrants could result in UK GDP dropping by as much as 1% or more.
We mentioned above that migrants to the UK have been found to start their own businesses at a higher rate than people who have spent their entire lives as UK citizens and residents.
In many respects, this shouldn’t be a surprising discovery. Migrants come from all corners of the world to the UK, and vary greatly in their social and cultural backgrounds and experiences.
Foreign nationals therefore often bring diverse perspectives and entrepreneurial energy to the UK, which frequently translate into business creation and innovation. These are benefits that would be lost to the country in a low-immigration (or even no-immigration) scenario.
The fertility rate in England and Wales has continued to fall, reaching a record low of 1.44 children per woman in 2023, according to the Office for National Statistics (ONS).
This is considerably lower than the “replacement rate” of 2.1 children per woman – the number required in order for a population to maintain its size over time. High levels of net migration have helped offset this decline in recent years. However, in a UK with no or low immigration, the UK’s old-age dependency ratio – the proportion of retirees to working-age adults – would inevitably escalate. This would exert downward pressure on the country’s tax revenues, at the same time as heightening pension and healthcare costs.
Whether you are a current or prospective migrant in the UK, or you are looking to interact with the UK Home Office for any other reason – for example, as an employer seeking a sponsor licence enabling you to hire foreign talent – our experts can be by your side. Simply fill in and submit our online contact form today to arrange a free consultation with our award-winning legal professionals at Cranbrook Legal in central London. You can also get in touch with us over the phone, by calling 0208 215 0053.
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