New population projections should boost the size of the economy and reduce borrowing by around £5 billion 28 January 2025 New ONS population projections should, if incorporated by the Office for Budget Responsibility (OBR), improve the economic and fiscal outlook, and reduce borrowing by around £5 billion, the Resolution Foundation said today (Tuesday). The new projections have revised up expectations of the working-age population in 2029-30 by around 400,000. Based on previous scenarios from the OBR, the Foundation estimates that such an upward revision to the working-age population would boost forecast GDP by around 0.3 per cent – or £12 billion a year. This in turn should reduce forecast borrowing by around £5 billion a year – all else equal. This would be welcome news for the Treasury ahead of the Spring Forecast given rising debt interest costs in the opposite direction, says the Foundation. A bigger population would ordinarily mean higher demand for public services. However, the Foundation notes that with the projected number of children – who are large consumers of public services – revised down by 160,000 in 2029-30, the new population projections may not increase the pressure on public services. Finally, the Foundation says the revised projections are likely to have wider impacts on the UK’s economic record – likely slightly weakening its already dire performance on productivity and per person income growth. The OBR will weigh up whether it agrees with the ONS projections, and the various impacts of a larger population, when it updates its economic and fiscal outlook on 26 March. Adam Corlett, Principal Economist at the Resolution Foundation, said: “Britain is forecast to have a slightly bigger population by the end of the decade than previously thought. While the projected number of children in Britain has been revised down by 160,000, this has been more than offset by working-age population forecasts rising by around 400,000, driven by higher net migration. “A larger working-age population means a bigger economy, more workers, and higher tax receipts, which should deliver a fiscal boost of around £5 billion a year by the end of the decade. If the OBR uses these population projections, this will be welcome news for the Chancellor given the wider economic pressures she is facing.” Notes to Editors The projected growth in the number of working-age people over this parliament has been revised up by over 200,000, and we use this number to estimate changes in the economic and fiscal outlook. The backdated revisions to the population are already reflected in GDP.
