Net migration fell to 204,000 in the year to June 2025, according to the latest Office for National Statistics figures. This represents a 69 per cent drop from the year before and is far below the peak of 944,000 in 2023.

The steep decline in migration numbers marks a turning point for employers. Work and study routes have contracted sharply, driven by tougher visa rules, higher salary thresholds and new restrictions on dependants. Skilled worker visa numbers are the lowest they have been in three years, with a 46 per cent reduction on the 2024 numbers. 

The decline is even starker in the health and social care sector, with a 94 per cent reduction in the numbers of migrants coming to the UK under the health and care visa route in the third quarter of 2025 compared to the peak in 2023.  

While headlines focus on politics, this drop in migration has real consequences for HR and talent leaders, who must understand what this means for workforce planning, skills availability and competitiveness in an already tightening labour market.

Talent pipelines are being disrupted

The most immediate impact is a shrinking pool of overseas talent. Critical shortage roles are harder to fill, and employers report rising salary expectations as competition intensifies. 

Organisations relying on graduate, early career or mid-skilled talent face particular difficulties. Higher skill thresholds and a sharp increase in salary requirements are preventing traditional pathways. In practice, this means fewer skilled and mid-skilled international workers, upward pressure on pay and lower productivity where unfilled roles stall growth or delay projects. HR teams must reassess talent strategies, explore alternative immigration routes and build more resilient pipelines that do not rely on a single entry point.

Compliance and cost pressures are intensifying

The regulatory landscape is also shifting, bringing greater risks and higher costs for employers. The immigration skills levy increased by 32 per cent on 16 December 2025, imposing a substantial financial burden on businesses that rely on sponsorship. At the same time, new rules around clawback clauses and salary deductions have increased the likelihood of compliance breaches. 

Sponsor licences are under heightened scrutiny, and HR teams must ensure internal processes can withstand UK visas and immigration audits.

The planned increase in the English language requirement for skilled workers from B1 to B2 by 2026-27 will also delay accessibility and reduce the pool of candidates eligible for sponsorship.

HR and legal teams must work closely to audit population data, review sponsorship policies and ensure staff understand the implications of non-compliance with tightening regulation.

Although the effects of falling migration are economy wide, some industries are hit harder. In financial services, the removal of many graduate-level roles from the sponsorship system, combined with higher salary thresholds, has led several institutions to scrap sponsorship-dependent graduate schemes – risking the long-term pipeline of specialist talent. 

Hospitality, logistics and construction relied heavily on medium-skilled migrant workers historically and, with reduced availability, recruitment bottlenecks threaten business continuity.

Looking ahead

For HR leaders, the question now is how to remain competitive when immigration is more challenging. Key priorities include re-engineering workforce strategies to rely less on sponsorship and more on creative solutions such as short-term mobility schemes, global talent networks, remote-first options and retraining staff internally. 

Employers should strengthen retention plans, particularly for international employees facing uncertainty around settlement under evolving earned settlement plans. Finally, budget planning is essential to understand how sustained lower migration could affect global mobility spending and growth plans over the next three to five years.

The UK is entering a new era of lower migration and HR leaders sit at the centre of this transformation. Understanding the landscape, managing compliance risks and rethinking talent strategies will be essential to sustaining competitiveness.

Louisa Cole is legal director at Eversheds Sutherland