Anti-migration policies are blamed for sluggish growth

Labour's anti-migration policies are contributing to the UK's sluggish economic growth, the world's foremost economic forecaster has warned, in a fresh blow for the chancellor Rachel Reeves.

- DAVID MADDOX

The stark warning from the Organisation for Economic Cooperation and Development (OECD) said that a slowing in productivity, partly due to a drop in the number of workers coming to the UK, meant “momentum is softening” in the economy.

It comes as the OECD said inflation in Britain will be the highest of all the G7 advanced economies this year, at 3.5 per cent, and the second-highest next year, behind only the United States.

In its annual economic outlook report, it said growth would slow to just 1.2 per cent next year, down from 1.4 per cent in 2025, and would only increase by 0.1 per cent to 1.3 per cent in 2027.

It also warned that the unemployment rate is expected to hit 5 per cent by 2027, while inflation is expected to be above the 2 per cent target at 2.5 per cent next year, easing to 2.1 per cent in 2027.

Summing up, the OECD claimed the UK is suffering because of “past tax and spending adjustments weighing on household disposable income and slowing consumption”. It added that “sluggish labour productivity and weak working-age population growth, partly due to slowing inward migration, will continue to act as a drag on the economy”.

In its bid to take on the surge in support for Nigel Farage’s Reform UK, Sir Keir Starmer’s government has ordered crackdowns on both legal and illegal migration. Last month, home secretary Shabana Mahmood announced the “biggest overhaul” in the migration system, including migrants reliant on benefits facing a 20-year wait for settlement - quadruple the current period and the longest in Europe.