How might the UK’s new approach to migration affect the economy?

Net migration in the UK reached historic highs following the introduction of the post-Brexit immigration system. While this is likely to have only minor effects on the labour market and public finances, evidence on housing is more mixed. The impact of further policy reforms targeting demand for migrant workers is also uncertain.

The UK’s post-Brexit immigration system came into force in January 2021, marking the end of the free movement of people between the UK and European Economic Area (EEA) citizens. At the time, the government expected that net migration – the difference between the number of people arriving and the number leaving – would fall (Home Office, 2020).

It can be extremely difficult to predict how changes to immigration policy will affect migration, but this expectation was certainly plausible – EU citizens had been the main source of inward-migration during the 2010s, and the new rules were significantly more restrictive towards them. But the rules were also more liberal towards non-EU citizens.

Fast forward to 2025, and the picture looks rather different. Net migration reached historic highs, peaking at 906,000 in 2023 (Migration Observatory, 2025). It dropped sharply in 2024, to 431,000, but remains higher than the levels of 250,000-350,000 commonly seen during the 2010s.

Why did net migration increase?

The sharp rise in net migration after Brexit was driven by an increase in non-EU citizens coming to the UK, with 3.6 million arriving between 2021 and 2024. Over the same period, EU immigration was far lower (575,000). Indeed, more EU citizens have left the UK than arrived since Brexit, meaning the European population living in the UK is lower now than it was in January 2021 (ONS, 2025).

Figure 1. Non-EU immigration to the UK, by reason, 2019Q2-2024Q4

Source: Office for National Statistics
Note: Figures are experimental and rely on ONS assumptions. 'Humanitarian' comprises arrivals under bespoke routes for Ukrainians and Hong Kong British Nationals (Overseas) status holders, as well as other small humanitarian routes.

Of the 3.6 million non-EU nationals who migrated to the UK, 70% (or 2.5 million) came as workers, as students, or as their partners or children accompanying them. This was primarily the result of post-Brexit policy liberalisations, but not entirely – non-migration factors also played a role.

For example, while the introduction of the graduate visa – a post-study work route – made the UK a more attractive destination to prospective international students, UK universities also began recruiting students overseas more actively as their financial situation deteriorated (Home Office, 2024; Migration Advisory Committee, 2024).

Similarly, the immigration of non-EU workers rose dramatically after care workers were made eligible for work visas in February 2022 (despite not meeting the skills threshold for the visa route). The goal here was to address staff shortages in the UK care sector. But the underlying driver of vacancies in care is low pay and poor working conditions, which are caused in turn by limited government funding. This makes it difficult for care providers to retain workers, whatever their immigration status (Migration Advisory Committee, 2024).

Work and study migration are not the only story. Between 2021 and 2024, around 335,000 people moved to the UK from Ukraine and Hong Kong after the government opened new humanitarian visa routes, with just over half arriving in 2022 alone.

Even so, net migration fell substantially between 2023 and 2024 – from 860,000 to 431,000 – after the Conservative government introduced a range of measures to reduce immigration. These included:

Visa restrictions on the family members of care workers and most international students.
Increasing Home Office scrutiny of applications to sponsor migrant care workers, after widespread reports of exploitation in the care sector.
Raising the salary threshold to recruit migrant workers, and the minimum income British citizens need to bring migrant partners to the UK.

This decline was possible because migration had previously been so high, meaning small changes to visa rules could have big effects on visa numbers. But, despite the fall, net migration was still higher in 2024 than before Brexit.

How does migration affect the labour market and infrastructure?

At present, there is limited academic evidence on the impacts of post-Brexit migration specifically. But there is extensive evidence on the economic impacts of migration more generally , both from the UK before Brexit and from other high-income countries.

Wages and employment

The number of employee jobs in the UK increased by 2.8 million (or 9%) between January 2021 and December 2024. Strikingly, two-thirds of this growth was accounted for by adult non-EU employees. They held 4 million jobs in December 2024, almost double the 2.1 million they held in January 2021 (HMRC, 2025). This increase in non-EU jobs far surpasses the number of work visas granted (to main applicants) over the same period, indicating that many people who came to the UK for non-work reasons – such as international students, Ukrainians fleeing the war, and the partners of work migrants – have also found jobs (Home Office, 2025; ONS, 2024).

Figure 2. Employee jobs held in the UK, by original nationality, July 2014-December 2024

Source: Migration Observatory analysis of HMRC payrolled employment in the UK.
Note: Data do not include self-employed jobs, and a person can hold multiple employee jobs at one time. 'Original nationality' refers to an individual's nationality when they registered for a national insurance number, therefore, people who moved to the UK and became UK citizens before applying for a NINo are recorded as UK-origin employees. Data are not seasonally adjusted; comparisons across years should be made using the same month.

A large body of research has found that migration has at most a small impact on the employment and wages of UK-born workers (Migration Advisory Committee, 2018). But these (small) impacts are uneven: the lowest-paid workers tend to ‘lose out’, while the highest-paid stand to gain. This is because, after arrival, some migrants ‘downgrade’ and work in jobs towards the bottom of the earnings distribution (e.g., due to difficulty getting foreign qualifications recognised). That puts them in closer competition with lower-paid UK-born workers (Dustmann et al., 2013).

Another important reason why the labour market effects are small is that migration not only affects the supply of workers, but it also affects the demand for workers. Several studies indicate that firms respond to immigration by changing their production techniques to more labour-intensive methods. This increase in labour demand offsets the increase in labour supply (Gray et al., 2020; Lewis, 2011).

House prices

Unlike the labour market, where the number of jobs can grow relatively quickly following an increase in the population, it takes longer for the UK to increase its housing stock. This is why the evidence generally suggests that migration has contributed to higher house prices. Indeed, one study estimates that the impact of migration on house prices was larger in local authorities with more restrictive planning practices (Migration Advisory Committee, 2018).

There is not a complete consensus on the issue, though. In some cases, migration has been found to lower UK house prices, because high-income residents in those areas move elsewhere following migration (Sá, 2014).

One significant limitation of the current research is that it does not consider the private rental market. Since the large majority of recent arrivals live in rented housing, this is the part of the housing market that is likely to be most affected by migration (Migration Observatory, 2024).

Public finances

When it comes to migrants’ fiscal impact, who is migrating matters more than how manyare migrating. Migrants in work, and particularly those working in highly paid jobs, will contribute more to public finances, while the youngest and oldest migrants will usually draw on more from the state, through things like education and healthcare. The impact of earnings and age can be seen most clearly in hypothetical scenarios modelled by the Office for Budget Responsibility (OBR, 2024).

Figure 3. Cumulative fiscal impacts, by scenario and age

Source: Office for Budget Responsibility
Note: 'Average migrant worker' has the same economic and fiscal profile as a representative UK resident, with three exceptions. They are estimated to pay around £12,500 in visa fees and the Immigration Health Surcharge, be ineligible for welfare benefits for the first five years of their stay, and require an increase in public spending to keep the capital stock constant.

Pre-Brexit research suggests that, overall, migrants paid into the public finances about as much as they took out through the use of public services (Migration Observatory, 2024). No study has looked at the fiscal impact of overall post-Brexit migration, but one analysis has looked at migrants on the Skilled Worker visa route specifically (Migration Advisory Committee, 2024). It found that, on average, ‘Skilled Workers’ who entered the UK in 2022/23 had a net positive impact of £16,300 in that year, while the average Skilled Worker household – that is, including their dependants – had a slightly smaller positive impact of around £12,000.

What does the future hold?

Net migration stood at 431,000 in 2024, but is likely to fall further, for two reasons.

Firstly, the 2024 figure still includes the first half of the year, before the Conservative government’s migration restrictions took effect. This period will ‘drop out’ of the ONS’s next estimates, for the year ending June 2025 (Home Office, 2025).

Secondly, in May 2025 the Labour government announced further measures to restrict migration (Migration Observatory, 2025). It shortened the list of occupations eligible for work visas, closed the care route for overseas recruitment (but not for migrants in-country), and said it would seek to reduce employers’ reliance on overseas workers while boosting the supply of domestic skills.

To achieve this final aim, the government has said that sectors requesting high numbers of work visas will be required to implement workforce training plans (Home Office, 2025). It has not, however, said how the policy would work in practice.

One option would be to link access to work visas to sector-level training. But this may fail to incentivise employers. Some may feel that their individual efforts would make little difference at a sector-wide level, while others could ‘free ride’ on the training investments made by others. Alternatively, it could introduce a ‘Resident Labour Market test’ (RLMT), whereby employers wanting to hire a migrant worker would have to show that they tried to recruit a domestic worker first. The main challenge here is that the Home Office can never truly know how hard an employer tried to recruit a domestic worker. As a result, RLMTs can turn into something of a box-ticking exercise for sponsors (Thomas, 2025).

Another option is to increase the costs of migrant workers, either by increasing salary thresholds or by increasing the Immigration Skills Charge (ISC) – a fee employers must pay when sponsoring migrant workers. Again, there is a question of how this would be implemented. Currently, the ISC is charged at a fixed rate per worker, which implicitly prioritises higher-paying roles, rather than those which are more closely aligned with the UK’s industrial strategy. While the government could in theory design a more sophisticated system, this would be difficult to do in an evidence-based way.

Regardless of the government’s approach, it is not clear that increasing the supply of domestic skills would necessarily lead to lower employer demand. This is because, as discussed above, the number of jobs in the labour market is not fixed. If the number of engineers increases through training, for example, UK employers may simply decide to employ more engineers. In practice, reducing employer demand for migrant workers may be beyond the government’s control.

The first five years of the post-Brexit immigration system have been a rollercoaster ride. Policy liberalisations enabled net migration to reach a record high, followed by a record fall. They also shifted the source of migrant arrivals from EU to non-EU countries. Academic research suggests that house prices are where the effects of migration are most noticeable, while its impact on the UK’s labour market and public finances is likely to be small. The government is hoping to bring down net migration further by reducing employers’ demand for overseas workers, but without the right incentives it will find it difficult to influence employers’ behaviour.

Where can I find out more?

The Migration Observatory provide briefings on migration issues and overviews of research, data and statistics on migration to the UK.
The Migration Advisory Committee, who advise the government on migration policy, summarised the economic and social impacts of migration in a 2018 report.
The House of Commons Library produce summaries of migration policy and statistics.
The Centre for Research and Analysis of Migration (CReAM) carries out high-quality research on migration.