The UK’s population could shrink by 2 per cent after the coronavirus pandemic if "missing" migrant workers do not return to the UK or are not replaced, a watchdog has warned.
The latest report by the Office for Budget Responsibility (OBR) cited research that suggested up to 1.3 million people might have left the country over the course of the crisis .
The OBR, which analyses the country’s economic forecast, said this posed a “risk to potential output in the long term”.
Its latest report suggested the population may be “substantially smaller” than indicated in official statistics due to the “significant numbers of foreign-born nationals returning home during the pandemic and lower levels of immigration than pre-pandemic projections assumed”.
Unless these “missing workers” return to the UK or are replaced by other migrants, this could lead to the population becoming 2 per cent smaller, “on a worst case basis”, the report said.
The OBR also warned that Brexit may make it more difficult for new EU migrants, who may be “discouraged by tighter immigration rules”, to move to the UK.
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The report said: "Although the extent of net emigration is still highly uncertain, the risk to the size of the population appears to be firmly to the downside.
"Such an outcome could reduce the potential output of the economy via a lower labour supply, leading to greater post-pandemic scarring than the 3 per cent included in our central forecast.
"This is a risk to the outlook for the public finances as a smaller economy would reduce tax receipts, amplified by the fact that migrants are more likely to be of working age and net contributors to the public finances. It would, however, reduce demands on public services."
The report came as Rishi Sunak announced separate visa reforms for “highly skilled migrants” in Wednesday’s Budget. The chancellor said this was a combined move by the UK to become a “scientific superpower”.
He told MPs there would be a "new, unsponsored points-based visa to attract the best and most promising international talent in science, research and tech, new, improved visa processes for scale-ups and entrepreneurs, and radically simplified bureaucracy for high-skilled visa applications".
This will help "drive innovation, and support UK jobs and growth”, the Treasury’s Budget document said.
Planned changes should make the process easier and quicker for qualifying applicants.
EU nationals wishing to continue living and working in the UK must now confirm their immigration status under the EU Settlement Scheme, post-Brexit.
New migrants wanting to come to the UK to live and work will need to obtain 70 points to be eligible for a visa under the new points-based immigration system.
Key requirements will include being able to speak English to a certain level, having a job offer from an approved employer and meeting a minimum salary threshold.
Mr Sunak was criticised by campaigners for the lack of financial support offered to migrants and families who are not eligible for government funding under no-recourse-to-public-funds conditions.
Satbir Singh, chief executive of the Joint Council for the Welfare of Immigrants, said the Budget announcement did not include "any protections for thousands of people who are excluded from the public safety net that’s kept so many people from falling into hardship".
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Additional reporting by Press Association