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‘Baby shortage’ could lead to economic slowdown, think tank warns  

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20/09/2021
A ‘baby shortage’ in Britain could lead to ‘long-term economic stagnation’, a think tank has warned.

The Social Market Foundation said the trend towards people having fewer children could leave the UK with fewer workers, a weaker economy and unsustainable public finances.

It said the government should do more to help people who want to have more children, including cheaper childcare and greater parental leave entitlement.

According to the think tank, birth rates in Britain are declining, with the total fertility rate (TFR) – the number of children per woman – standing at 1.58 in England & Wales in 2020. That’s almost half the post-World War Two peak of 2.93.

In Scotland, the TFR was 1.29 last year.

Since the early 1970s, the TFR has been below the critical replacement rate of 2.1 children.

The think tank said that depending on the scale of immigration and trends in life expectancy, the UK could see its population shrinking in the 21st century.

Britain could also face long-term shortages of working-age adults. There are currently a little under three over 65s for every ten workers, but by the middle of the next decade that ratio will rise to 3.5. By the 2060s the number will be closing to 4.

Meanwhile, by 2050 a quarter of Britons will be over 65, up from a fifth today.

“This combination of a lower share of the population in work and a higher share in need of economic support clearly has a negative effect on the productive capacity of the economy,” the Foundation said.

The OECD estimates that typical British working parents spend 22 per cent of their income on full-time childcare, more than double the average rate for Western economies.

“That might mean that there is more scope for the government to influence birth rates through childcare policy in the UK than in other parts of the world starting from a better position on childcare costs,” the report said.

Aveek Bhattacharya, chief economist at the SMF said: “The question of whether the government should intervene to try and increase the birth rate is clearly a sensitive topic that must be delicately handled. However, given the alarming fall in fertility rates, and the risks that population ageing poses to our social and economic wellbeing, it is a discussion we should not duck.

“Many other liberal democracies are exploring the use of policies like cash payments to parents, more generous parental leave and cheaper childcare to make it easier for those that want children to have them. Here in the UK we should consider the merit of these policies– not least because they would bring many other benefits to parents, children and wider society.”

 

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