906,000 people was the peak net migration figure to mid‑2023 — a striking number that helps explain why migration sits atop public debate.
The post‑Brexit points‑based system and the May 2025 White Paper have refocused ministers on reducing overall inflows while protecting growth. This short introduction sets a clear purpose: a balanced, evidence‑led trend analysis comparing measurable, documented routes with those that remain hidden.
Legal routes are tracked and easier to assess for effects on growth, wages and fiscal flows. By contrast, shadow routes increase uncertainty and complicate evaluation.
Readers will find a careful separation of short‑run pressures, such as housing and NHS demand, from long‑run dynamics like dependency ratios and innovation. The article signals sectoral focus on care, health services, and higher education, and explains why triangulation across statistics and administrative records is essential.
Key Takeaways
- Analysis compares measurable routes with hidden ones to show different economic effects.
- Post‑Brexit rules and the May 2025 White Paper shape current policy and numbers.
- Legal inflows are clearer for fiscal and productivity assessment; shadow work raises uncertainty.
- Short‑run service pressures differ from long‑run demographic and innovation impacts.
- Sectors such as healthcare, and universities face particular reliance and policy trade‑offs.
Purpose and scope: a balanced, evidence-led trend analysis for 2025
A convergence of new rules and changing admission patterns means 2025 requires careful, evidence-led appraisal of migration outcomes.
What this report covers and why now
This report aims to compare the economic impact of documented routes and those outside formal controls. It responds to rising public concern after net inflows peaked recently and to the 2025 White Paper proposals.
It focuses on labour market, fiscal and productivity outcomes across work, study, family and humanitarian routes, while also examining unauthorised presence such as overstays and unresolved asylum cases.
Methodological notes and data limitations
Analysis combines official statistics, administrative records, and independent research. Where single sources fall short, triangulation supports more robust conclusions.
Estimates for people without status show a wide range from around 120,000 to 1.3 million, against 10.7 million foreign-born recorded in the 2021/22 census. Such a spread reflects detection limits and sampling bias.
“Illegal migration is inherently hard to measure; administrative datasets capture detected cases, not the whole picture.”
- Key data gaps relate to employment rates, earnings, and household composition.
- The analytical process adjusts for timing effects from asylum and enforcement.
- Important questions remain on displacement, complementarities, and net outcomes.
The current landscape of immigration in 2025
Immigration policy now leans on a points regime that privileges higher salaries, targeted shortage occupations, and formal sponsorship.
From free movement to a points‑based framework
Free movement ended after Brexit, and the system now uses salary thresholds, shortage lists, and sponsor licences to govern entry.
Skilled visas receive priority through clearer settlement paths. Sponsors must meet checks and assign points to applicants. This structure narrows routes for lower‑paid roles while protecting high‑demand professions.
Key figures and trends to 2036
Net migration peaked at 906,000 to mid‑2023 before falling. Provisional estimates show about 431,000 by December 2024.
Visa grants rose from roughly 1.1 million in 2022 to 1.3 million in 2023, then fell to about 900,000 in 2024. ONS projections (Jan 2025) indicate population growth of 6.6 million by 2036, with around 90% driven by migrants and their UK‑born children.
Visa patterns and sectoral reliance
Health, social care and higher education depend on international workers and students. Policy shifts that cut lower‑skilled inflows risk staff gaps in those services.
Ministers aim to reduce care and lower‑skilled entries by roughly 50,000 while streamlining routes for high‑skilled applicants and altering settlement rules to shape future numbers.
White Paper 2025 at a glance
The May 2025 White Paper, titled “Restoring control over the immigration system”, proposes tighter sponsorship rules and targeted visas to balance numbers with economic need.
“Ministers want fewer lower‑skilled arrivals while keeping essential capacity in critical sectors.”
- Policy seeks to manage per year flows alongside stock measures of foreign‑born population.
- Debates on people per square kilometre link population growth to local service capacity.
- For more information on recent migration figures please follow the link.
Public perception and political context
Voters’ perceptions about who is here legally and who is not often drive headline policy responses.
Legal versus illegal: what Britons think, and why it matters
Almost half of Britons (45%) say they would back admitting no more new migrants and requiring many people to leave. Polling also finds 47% believe more migrants are here illegally than legally, despite census figures showing 10.7 million foreign‑born residents in 2021/22.
Such misperception fuels tougher rhetoric. People often conflate undocumented presence with all arrivals, which shapes political priorities and media debate.
Trade-offs the public accept: NHS staffing, skills and growth
Attitudes change when concrete choices appear. A clear majority (67%) prefer ensuring the NHS is fully staffed even if legal inflows rise.
Similarly, 60% prioritise filling skills shortages and 59% want to attract the “best and brightest”. These trade‑offs show public opinion moderates when benefits are made explicit.
“Britons are far more negative about illegal migration than legal migration; only 22% say legal migration has been bad for the UK, versus 66% for illegal migration.”
| Issue | Public view | Policy implication |
|---|---|---|
| Perceived scale | Many people overestimate illegal presence | Leads to tougher removal and border controls |
| Service trade‑offs | Majority support staffing NHS and filling skills | Creates space for targeted legal routes |
| Judgement | Legal seen as good; illegal seen as bad | Government must balance control with growth needs |
Clear communication of figures and definitions matters. Better public information can change support for reforms and improve trust in government policy on migration.
The Economic Impact of Legal vs Illegal Immigration in the UK in 2025
Accurate measurement rests on distinguishing tracked admissions from people present outside formal permission.
What counts as legal or illegal
Legal migrants are those admitted under work, study, family, or protection visas and recorded in administrative systems. Illegal presence covers overstayers, unauthorised entries, and those without leave to remain.
At the macro level, arrivals add to aggregate GDP by supplying labour and by boosting demand. GDP per capita changes depend on output per person, capital deepening, and productivity.
Labor channels work via complementarity or substitution, sectoral bottlenecks, wage dispersion, and price moves in services. Fiscal channels include taxes and National Insurance paid, benefit access, public service use, and longer‑run dependency ratios.
Data on illegal activity are sparse because of off‑the‑books work, under‑reporting, and enforcement gaps. Good research uses quasi‑experimental methods, sector case studies, and linked admin data to tackle attribution.
The economic impact of legal immigration
Legal immigration supplies vital labour where domestic hiring falls short. It eases vacancy pressures and helps maintain output in healthcare, higher education, and the technology sector.
Filling shortages while weighing wage pressures
Documented migrants stabilise staffing in tight occupations and reduce service disruption. Where skills match local needs, they complement resident workers and boost productivity.
There can be distributional wage pressure in specific lower‑paid roles. Policy tools such as wage floors and shortage lists can reduce displacement risks.
Fiscal balance and long‑term ratios
On average, legal arrivals pay income tax, National Insurance, and VAT. Younger arrivals improve dependency ratios and may be net contributors over time.
Short‑run service use can rise, but evidence shows a neutral to positive net fiscal position once employment and age composition are accounted for.
Sector spotlights
NHS and social care rely heavily on international recruitment. Universities benefit from fees and research spillovers through international students who often move to work visas.
| Area | Role | Policy leverage |
|---|---|---|
| NHS & care | Staff pipelines, reduce waiting lists | Sponsor rules, targeted visas |
| Higher education | Tuition income, talent for research | Student visas, graduate routes |
| Tech & innovation | Skills for growth, startups | Shortage lists, salary thresholds |
The economic impact of illegal immigration
Uncertainty about how many people live outside regular permission creates major challenges for analysis.
Estimates range from roughly 120,000 to 1.3 million, and detected Channel crossings since 2018 exceed 150,000. Such wide spans reflect partial coverage in surveys and administrative gaps.
Informal employment matters for local labour markets. Undeclared work can undercut compliant firms, depress pay in niche roles, and shrink recorded tax receipts.
Size, measurement, and Home Office context
Administrative enforcement captures only detected cases. That means many situations remain off the record, and policy relies on imperfect data from the home office.
Labour markets and compliance
Where undocumented labour competes directly with low‑paid workers, displacement risks rise. Sectoral variation produces different non‑compliance rates.
Public costs and system pressure
Costs fall on processing, accommodation, and enforcement. Backlogs for asylum seekers increase local service demand and add to fiscal strain.
| Area | Effect | Policy lever |
|---|---|---|
| Measurement | Wide ranges; partial detection | Better admin linkage, surveys |
| Labour market | Undercutting, lower wages | Employer checks, sanctions |
| Public finance | Processing and housing costs | Casework capacity, returns |
Conclusion: Persistent uncertainty complicates net estimates. Improved detection, clearer work rules during claim processes, and targeted compliance tools would reduce incentives for irregular work and support fair competition for compliant employers.
The shadow economy of illegal immigration
Informal labour markets concentrate where short contracts coincide with weak oversight and tight margins.
Where informal activity concentrates: sectors, regions, roles
Hospitality, agriculture, construction, and some personal services show a higher incidence of off‑the‑books hiring. These sectors rely on short shifts, seasonal peaks and high staff turnover.
Regional hotspots include rural counties with harvest cycles and urban areas with dense hospitality demand. In those places, people per workplace can be high and supervision low, raising compliance risks.
Tax gaps, undercutting, and effects on compliant firms
When earnings go unreported, a tax gap emerges, and Exchequer receipts fall. That cost shifts to compliant taxpayers and firms who meet payroll and VAT rules.
Undercutting by operators using undocumented labour reduces prices unfairly. Compliant businesses face pressure on margins and may lose contracts to cheaper, non‑compliant rivals.
Evidence gaps remain. Administrative data only partially capture non‑compliant work, so research must triangulate inspections, casework and surveys to estimate numbers.
“Limited access to formal work during asylum processes increases vulnerability to exploitation in off‑the‑books roles.”
Policy levers include stronger right‑to‑work checks, targeted labour market enforcement, and sensible regularisation pathways. These steps can shrink the shadow economy, protect workers, and restore fair competition.
Comparative analysis: legal vs illegal immigration
A side‑by‑side comparison shows that recorded routes and shadow channels create very different fiscal and productivity footprints.
Net fiscal effects and productivity implications
Recorded entrants generate visible tax receipts and social contributions. This produces a clearer net fiscal picture and easier attribution of benefit flows.
Unrecorded presence often reduces measured contributions and raises enforcement and accommodation costs. That makes aggregate figures harder to trust.
Short‑run vs long‑run impacts
In the short term, both channels add pressure on housing and services. Long term, younger, legally employed cohorts tend to improve dependency ratios and productivity.
Policy tools such as wage floors and shortage lists change rates of displacement and complementarity quickly when adjusted.
Housing, infrastructure, and service demand
Legal migrants usually enter via sponsors, so planners can anticipate housing and service needs. Irregular cases create sudden local costs and casework backlogs that strain public services.
| Dimension | Recorded routes | Shadow channels |
|---|---|---|
| Fiscal profile | Recorded taxes; positive net over time | Lower recorded contributions; enforcement costs |
| Productivity | High‑skilled entrants lift firm output | Low‑wage work can deter investment |
| Service demand | Plannable housing and health use | Unpredictable pressure and local costs |
Policy options and future outlook
A calibrated package of visa and enforcement reforms offers a route to lower numbers alongside higher productivity.
Implementing the 2025 White Paper means sequencing measures so that immigration levels decrease without compromising care, health, or research. Ministers plan to cut lower‑skilled and care inflows by around 50,000 while prioritising high‑skilled applicants and faster settlement for top earners.
Implementing White Paper measures
Adjusting visas—salary thresholds, shortage lists and dependant rules—lets the government shape workforce composition. This can reduce inflows quickly and keep posts in the NHS and universities filled.
Enforcement and regularisation pathways
Stronger Home Office capacity, smarter inspections, and data‑driven targeting will shrink the shadow economy. At the same time, carefully designed regularisation for long‑resident people with clean records can boost tax receipts and cut exploitation.
Skills, visas, and wage floors
Wage floors and sector training compacts encourage firms to invest rather than rely on cheap labour. Aligning visas with skills plans helps migration support productivity, not substitution.
“Sequencing controls, enforcement and selective regularisation offer the best chance to reduce numbers while protecting growth.”
- Sequence reforms to safeguard NHS, care, and innovation.
- Use visa levers to refine inflows and dependency rates.
- Upgrade Home Office compliance and monitoring frameworks.
- Consider targeted regularisation to improve recorded contributions.
Conclusion: The Economic Impact of Legal vs Illegal Immigration in the UK in 2025
A clear focus on composition and timing gives more insight than any single headline figure.
This article sets out a balanced, evidence‑led comparison of recorded routes and shadow channels. Headline flows eased after a 2023 peak, yet public concern about services and control remains strong, and many support staffing the NHS even if immigration rises.
Key takeaways note that documented entry brings measurable gains in skills and tax receipts, while unauthorised presence raises harder‑to‑measure costs and compliance challenges.
Practical policy blends tighter controls, targeted visas, and stronger labour standards. With better data and fair processes, the country can cut avoidable costs, protect people on the ground, and keep growth strong.
For more Economic Indicators articles, please follow the link.
FAQ
What does this analysis cover, and why is 2025 important?
The report examines trends in lawful and unlawful migration, fiscal balances, labour market effects, and public-service pressures. It focuses on 2025 because recent policy changes — notably post-Brexit visa rules and the 2025 White Paper — have altered flows and labour needs, while data from 2019–2024 provide a baseline for short‑term projections.
How are “legal” and “illegal” migration defined for measurement?
Legal migration refers to people entering or remaining with valid visas, refugee or settled status, or recognised leave to remain. Illegal migration covers unauthorised entry, overstaying, and people without a recognised status. The distinction matters because data quality, rights to work, and access to services differ markedly between the two groups.
How reliable are estimates for unauthorised migration?
Estimates for unauthorised flows contain substantial uncertainty. Official counts rely on Home Office detections, asylum applications, returns, and border interceptions, plus academic and NGO studies. Researchers use ranges rather than point estimates and note under‑reporting in informal work and accommodation data.
What are the main fiscal effects of lawful migrants?
Lawful migrants typically pay income tax, National Insurance and VAT, while using public services. Short‑term fiscal positions vary by age, skills, and benefit access, but many studies show a neutral or positive net fiscal contribution over a migrant cohort’s working life, especially when arrivals are of working age and fill labour shortages.
Do unlawful migrants increase pressure on public services and costs?
Unauthorised migrants can create concentrated pressures — for example, through asylum reception costs, legal processing, and enforcement. However, exact net costs depend on numbers, duration of stay, and access to services. Informal work can reduce welfare use but raises enforcement and accommodation expenses.
How do migrants affect wages and employment for UK-born workers?
Impacts on wages and employment vary by skill group and geography. Evidence suggests that lawful migration fills vacancies and can complement native labour, supporting productivity. Low‑skill inflows may exert slight downward pressure on wages in specific local markets, while higher‑skilled arrivals tend to raise productivity and average earnings.
What role do migrants play in the NHS, care, and education sectors?
Migrants, particularly those admitted under skilled and sectoral visas, supply essential labour in the NHS, adult social care, and universities. They reduce recruitment gaps, support service continuity, and contribute tax revenues. Policy restrictions that limit these routes can exacerbate staffing shortages and increase costs.
How does illegal migration feed into the shadow economy?
People without lawful status often work in informal sectors such as agriculture, hospitality, construction, and domestic work. This activity is typically cash‑based, under‑reported, and untaxed, creating tax gaps, undercutting compliant firms, and complicating labour‑market regulation enforcement.
What are the housing and infrastructure impacts of migration?
Both authorised and unauthorised arrivals increase demand for housing, schools, and transport in receiving areas. The scale and timing differ: legal routes often allow planning and targeted provision, while sudden asylum inflows can cause short‑term accommodation pressures and higher local costs.
How does the 2025 White Paper aim to change migration outcomes?
The White Paper seeks to reduce net migration while protecting economic needs. Measures include tighter enforcement, revised visa rules, and pathways to regularise some workers. Its success depends on implementation, labour‑market flexibility and international cooperation on returns and asylum processing.
Can regularisation reduce the costs of illegal migration?
Targeted regularisation can lower enforcement costs, increase tax receipts and bring workers into regulated employment. It must be carefully designed to avoid incentivising irregular entry and to include labour protections and monitoring to protect wages and firms.
What trade‑offs does the public accept between migration control and economic needs?
Public opinion often supports stronger border controls but also values migrants who staff the NHS, care homes and universities. Policymakers face trade‑offs: stricter limits may reduce net inflows but risk labour shortages and slower growth; more flexible skill routes can support productivity but may raise political concerns about scale.
How do researchers assess net fiscal effects across time horizons?
Studies use cohort‑based lifetime analyses, comparing taxes paid and public services consumed over decades. Short‑run assessments highlight immediate costs like education and healthcare for families; long‑run frames account for lifetime earnings, pension contributions and demographic effects on dependency ratios.
Which UK regions feel migration pressures most acutely?
Urban centres such as London, Manchester and Birmingham receive high shares of arrivals, straining housing and services. Rural areas with seasonal agriculture also experience concentrated informal work. Regional outcomes depend on local housing supply, school capacity and labour demand.
What data sources inform projections to 2036 and beyond?
Projections rely on ONS demographic models, Home Office visa and asylum statistics, Department of Health workforce data, and sector surveys. They combine fertility, mortality and migration assumptions; uncertainty grows with the projection horizon, especially for unauthorised flows.
How significant are tax gaps from the shadow economy?
Tax gaps vary by sector and region, but can be material where informal work is common. Undeclared wages reduce income tax and National Insurance receipts, while cash transactions lower VAT. Closing these gaps requires enforcement, employer compliance checks, and labour‑market reforms.
What policy levers best align migration with productivity gains?
Key levers include targeted skills visas, wage floors to prevent undercutting, employer levies directed at training, streamlined recognition of foreign qualifications, and investments in domestic skills to reduce long‑run dependence on inward labour.
How do enforcement costs compare with investment in legal routes?
Enforcement entails border processing, removals, and asylum casework, which can be costly and recurrent. Investing in efficient, legal labour routes and quicker processing can reduce incentives for irregular migration and lower long‑term enforcement expenditure, while supporting sectors with legitimate shortages.
Where can readers find up‑to‑date statistics and analysis?
Reliable sources include the Office for National Statistics, Home Office immigration statistics, Institute for Fiscal Studies, Migration Observatory at Oxford, and sector bodies such as NHS England and the Resolution Foundation for fiscal analysis and labour‑market context.
