RUTH SUNDERLAND: Might there be a baby bounce-back when the coronavirus is vanquished? Let’s hope so for all our sakes
- Deaths from Covid have taken a grim toll, with 2.8million fatalities worldwide
- But the more profound demographic – and economic – effect is likely to come from births, or rather the lack of them
- We are in the grip of a baby bust that will have huge implications for society and for the UK and world economy
In the spring, a young man’s fancy lightly turns to thoughts of love, as Lord Tennyson wrote. Only not so much in a pandemic, as it turns out.
Deaths from Covid have taken a grim toll, with 2.8million fatalities worldwide. But the more profound demographic – and economic – effect is likely to come from births, or rather the lack of them.
Early data shows that the number of births globally last year fell sharply, and indicate this is likely to persist next year and beyond. We are in the grip of a baby bust that will have huge implications for society and for the UK and world economy.
A baby bust: Early data shows that the number of births globally last year fell sharply, and indicate this is likely to persist next year and beyond
HSBC’s global economist James Pomeroy points out that coronavirus deaths, whilst shocking and tragic, constitute less than 0.03 per cent of the world’s population.
But if births fall by 10-15 per cent as he fears based on previous pandemics, natural disasters and recessions, the impact on the global population would be nearly ten times greater than the deaths. Lockdowns, the economic shock and the uncertainty caused by the pandemic have changed human behaviour dramatically.
Initially, some observers believed it would lead to an increase in births, as lockdowns meant couples had little else to do. The reverse is true. Anxiety over jobs, lack of opportunity for single people to find a partner, wedding cancellations, women’s worries about the risks of going into hospital: all contributed to the dearth of births.
There have even been suggestions that the horrors of home schooling have had a contraceptive effect for some. Indirectly, policies brought in after the financial crisis and ramped up due to Covid, such as low interest rates and QE money printing, have contributed. These are effectively a transfer of wealth from young to old, helping push up the price of assets, including homes. The prohibitively high cost of property is key to delaying couples starting a family.
The upshot is that people are either opting or being forced to put plans for parenthood on ice. In some cases they will end up not having children at all.
This accentuates the existing trend. The fertility rate was on the decline even before the pandemic, having dropped by more than 17 per cent since 2012.
A study at Southampton University suggests childbearing could drop to historically low levels, with up to 66,000 fewer children born across the UK by 2023.
This is in line with other developed countries. In Italy, there were only 400,000 births last year, a figure vastly outstripped by the 647,000 deaths. French women are having the lowest number of babies since WW2.
A baby bust is terrible for the economy. Falling populations mean slower growth. Economies need young people for their energy, ideas and entrepreneurial verve. Society needs them to fund healthcare and pensions through their tax payments.
The ageing population is a ticking timebomb for the national finances because it means higher public spending, lower tax revenues and increased borrowing.
The Office for Budget Responsibility predicts government debt will rise from 100 per cent of national income today to 400 per cent within 50 years, due to age-related expenditure.
We could tilt the demographics in our favour through immigration: welcoming young, highly skilled people from abroad would make economic sense. We could raise taxes and slash spending on state elder care and pensions. We could raise the retirement age even further. None of these would win a popularity contest.
Might there be a compensatory baby bounce-back when the virus is vanquished? Let’s hope so.