Last week, UK government figures showed that the birthrate in England and Wales tumbled to a record low.
The Office for National Statistics (ONS) said the fertility rate (the number of children born to each woman) fell to 1.41 children per woman in 2024. That is the third year running that it has dropped and is the lowest since records began 90 years ago.
It is widely accepted that a birthrate of 2.1 is required to sustain a population at its current level.
This means the population of the United Kingdom is likely to fall over time, presenting a political and economic problem for Keir Starmer’s Labour government, which is already facing a storm of protests over immigration and a stagnant economy.
The birthrate figures cut to the heart of both of these issues and split the political narrative in ways that are difficult to address.
It pits those who say there are too many people already in the UK and that immigration needs to stop, against those who say that without more people and a younger population – which can be addressed by allowing more immigration – the economy will stagnate.
Even Tesla and SpaceX founder Elon Musk got involved in the debate, posting on X: “Low birth rate is the number one threat to the West, followed closely by migration.”
Why is the birthrate falling in the UK?
According to the report from the ONS, people in England and Wales are choosing to have children later in life than they did in previous decades. The average age of a new mother is 31, up from 29 two decades ago. The average age of a father is 33.9, up from 32.1 in 2004.
This has been put down to rising housing and childcare costs and an uncertain employment landscape. Businesses complain that rising taxes – or the threat of them – means they are nervous about hiring staff. In particular, an increase in the National Insurance contributions paid by employers has hit jobs in some sectors hard.
What effect will a falling birthrate have on the UK’s economy in the short term?
In the short term, a falling birthrate will actually modestly improve the UK’s finances, said Simon French, chief economist at Panmure Gordon. “The first 16 years [of] children are a net drag on economic activity as they require funding and childcare.”
Paul Dales, chief UK economist at Capital Economics, added: “I suppose some positives are that it reduces the pressures on the health and education systems over the next 15 to 20 years and it may mean that 20- to 40-year-olds have a bit more money to spend than otherwise.”
And in the long term?
In the long term, a lower birthrate tends to result in a lower rate of economic growth, as eventually there are fewer people working than otherwise.
And as the average age of death is rising, this also adds to the fiscal pressures, as it means in the future a smaller share of the population will be working and a larger share will be retired.
After an initial gain in finances, therefore, the longer-term prospects are poorer.
“Thereafter, you have yourself a problem if the cohorts are unequal,” said French. “So much of the state we are in is the result of treating the ‘baby boom’ era as stable [when a larger cohort of workers paid lots of income tax] and insufficient planning for [a] stable financing setup when they get old.”
These issues will become very apparent by the middle part of this century, if the birthrate continues to fall rapidly, he said.
Some economists also worry that in the future there will not be enough people of working age to support those who have retired.
The ratio of pensioners to working-age people is rising. There were 280 pensioners per 1,000 workers in 2020. That is expected to reach 393 per 1,000 by 2070.
This is a major problem as retired people in the UK receive a state pension paid from the National Insurance contributions of those in work now, rather than from money they themselves paid in while working.
Why does a falling birthrate harm economic growth?
Simply, more people almost automatically equals a bigger economy. Fewer people, a smaller one.
Some say the correct issue to consider is not gross domestic product (GDP) on its own, but GDP per capita (per head). Many people in the UK feel their personal circumstances have not improved for years.
Philip Shaw, UK economist at Investec, said: “In the short term, a low birthrate appears quite benign as it takes some pressure off public services such as schools and the NHS.
“But if this were to continue, in the years ahead it would mean that the ratio of people working to each person not working [ie, those either side of working age] will fall further, putting more pressure on the public finances and, in all likelihood, taxation. A fertility rate of 1.41 is very low in this respect, although it is not out of line with that of other major countries.”
This year, the birthrate in France is 1.64, and in the United States, it is 1.62. It is highest in countries like Afghanistan (4.66) and Chad (5.94), according to figures from the CIA’s study of birthrates.
What is the solution?
There is no obvious fix, experts say.
Investec’s Shaw said: “There most certainly is a tension between looking at the evidence that the UK is overpopulated, and saying that we need more people in the future to support those not working. There are no easy answers to this, and unless we benefit from an AI productivity miracle, compromises will have to be made.”
Tax rises and increased government borrowing seem highly likely to meet the rising costs of an ageing population.
Allowing immigration from countries with younger populations might seem like a solution, but the UK and other Western countries are currently seeing protests against immigration rates.
This week, the government said it is suspending a scheme enabling registered refugees to bring family members into the country amid soaring support for the far right in opinion polls.
The move was announced as Labour returned to Parliament after a summer break that has seen anti-immigration protesters repeatedly targeting hotels housing asylum seekers across England – most recently in Epping, northeast of London, on Sunday.
Reform UK, the party led by Nigel Farage, which is at present riding high in the polls, has become popular for its anti-immigration stance. It says the UK needs a “complete 180 shift in attitudes” and blames crime on immigrants.
ONS figures actually show that crimes against households and individuals have fallen in the past 10 years rather than rising, however.
Instead, anti-immigration parties such as Reform want people to have more babies.
“We’re trying to cut immigration drastically,” a Reform UK spokesperson said. “At the same time, to fix that population crisis, we’re trying to encourage British people already here to have kids.”
They will do this by scrapping the two-child benefit cap, which limits state support to the first two children. Farage also promises a larger tax break for married couples.
