Having children has become an unaffordable luxury for many of her generation, says Vanessa, a 35-year-old project manager living in Brighton.
“My friends who managed to start a family, without exception, all received large sums of money from their parents to get on the property ladder. For those of us not fortunate enough, we are trapped in the rental market, largely with insecure, poorly paid employment.”
Vanessa’s outlook is also clouded by concerns about the climate crisis, crumbling public services and the “plummeting mental health of young people”, she says. “Put these into the mix and you have a perfect storm for declining birthrates.”
Her decision is replicated worldwide. The number of women of child-bearing age is in long-term decline across Europe, parts of Asia, South America and the US, a situation made worse by the steep drop in the number of women, and their partners, who either want or are able to have children.
These factors have led to a sharp fall in fertility rates – the number of children born to each woman.
While the issues facing governments from rapidly ageing populations are relatively familiar, a decline in fertility rates that was once limited to Japan has spread across the world. Today, almost every continent has a growing age-dependency ratio as average birthrates fall and people live longer. If the global population hits 10.4 billion in the 2080s as predicted, it will only be because sub-Saharan Africa has continued on its current trend, pushing the population across the African continent from about 1.5 billion to as many as 2.5 billion.
Here we look at the trends, and the implications for future governments, of a demographic revolution.
How the UK is affected
The total fertility rate across England and Wales fell to 1.49 children per woman in 2022, from 1.55 in 2021, according to the Office for National Statistics (ONS).
As a benchmark, the Organisation for Economic Co-operation and Development (OECD) says that to maintain a population, the “replacement rate”, often known as the “R-rate”, needs to be at least 2.1 children per woman.
It has been well documented that the pandemic, rather than spark a baby boom, had the reverse effect. Yet the recent drop in fertility has shocked demographers. The rate was already declining, starting in 2010: then came Covid-19, the Russian invasion of Ukraine and a deepening of the climate crisis, which all appeared to add a further downward shift, taking the fertility rate to the lowest since comparative data began being kept in the 1930s.
Ann Berrington, a professor of demography and social statistics at Southampton University, says: “The Human Fertility Database covering England and Wales documents the 1960s baby boom, 1970s baby bust, the fluctuations of the 1980s and 1990s that kept things fairly stable, increases through 2000s to 2010, and then a decline to the historical low levels seen today.”
The trend in Scotland follows the same pattern, but on a lower trajectory during each period over the last 60 years. Northern Ireland follows the same pattern on a slightly elevated path. ONS figures tracking live births tell the same story of decline. They show 605,479 in England and Wales in 2022, a 3.1% fall from 2021 and the lowest number since 2002.
This figure is not an all-time low because the UK’s population has been expanding since 2003, when the UK embraced the free movement of people from countries that had recently joined the EU. Opening its doors to workers from eastern Europe resulted in an increase in total births, and maintained fertility rates, which were about the same for UK-born and foreign-born women at the time.
But when record numbers of women are reaching the age of 30 child-free, the effect has clearly waned.
According to the latest data, half of women born in 1990 were childless by their 30th birthday – the first generation for which that is true.
It’s the economy …
When the Observer asked readers, including Vanessa, to say why they had not had children, or had restricted the size of their family, most replied that financial constraints were the main reason.
Hannah, a 35-year-old marketing executive living in London, says she had been unable to have the two children she wanted with her partner of 10 years, despite moving to a cheaper area to secure a bigger home.
Childcare costs were prohibitively high, along with other costs of living, she says. “The family we want to have is financially out of reach. We have only ever had one holiday together since our relationship began. We are cutting down on food bills and looking for extra work to make having a child happen.” She and her partner are considering moving abroad.
In the early 00s, Britain and France were outliers in Europe. Both countries had generous family benefits and governments with a stated aim of supporting children. The scale of generosity, from tax credits for low earners to an expansion of early years centres and childcare subsidies, meant both countries – under Labour in the UK and the Gaullist centre-right in France – arrested declines over previous decades.
In the UK and France, these subsidies were scaled back after the recessions of 2008-09. Austerity across all public services was the message from Nicolas Sarkozy, France’s president from 2007 to 2012, and from the UK ’s coalition government from 2010 to 2015.
For all the impact of welfare and public service cuts, a study by Fathom Consulting indicates those interested in creating a family look further ahead. In the aftermath of the financial crash of 2008, it was clear the future for many households looked bleak, with incomes flat and costs, especially housing, on a steady incline. Without the optimism of previous generations, couples decided not to have children, according to the initial findings from a study of Japan that links declines in fertility with periods when the future outlook for the economy was uncertain.
“It turns out that there is a good relationship between forecasts of 15-year forward growth in Japan at any point in time and the fertility rate in Japan at the same point in time,” says the report.
“In other words, people have kids when they feel optimistic that, when their kids join the workforce, the standard of living they will enjoy will be better than it is now.”
To measure growth, the report used national income per capita, which has improved in Japan while the overall economy has stagnated. Japan’s fertility rate is 1.3, just ahead of Italy’s 1.2 and South Korea’s 0.8.
The consultancy’s director, Erik Britton, says the research is ongoing and the conclusions only tentative, but the initial findings reveal that government support, while a necessary element, might not be the most important factor. A nation confidently growing its economy is the comfort people need before starting a family, he says.
… but also other factors
Recent data from the UK Generations and Gender Survey tells us that the ideal family size remains relatively high, with an average of about two children. There remains evidence of a two-child family ideal.
Berrington says that when her team asked childless people whether they intend to have children, there was “a lot of uncertainty in the answers”. Higher proportions of young adults said they probably or definitely would not have children, as compared with the proportions reported by millennials at a similar age.
Fiona Powley, 49, a life coach, knew she did not want children by the age of 12, and knows many contemporaries who also prefer to be child-free; she runs the group Bristol Childfree Women. As an indication of the problem faced by any government seeking to boost fertility, she says that when she asks people as they join her community what they enjoy most about being child-free, “they talk about time and freedom: finances don’t usually feature”.
She adds: “A common judgment from others asks ‘who will look after you when you’re old?’, to which most members might say they’ve made good financial provision for older-age care and pensions as they’ve not have the financial strain of children.”
Sarah Harper, a professor of gerontology at Oxford University, says one of the main issues is equality, meaning equal treatment by the state and within a relationship.
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It is only when women believe they can continue working and have spare time that they will take the plunge into motherhood, she says – though the evidence from the Nordic countries, where fertility rates have followed the general downward trend, is weak. However, it might explain why traditional South Korea’s fertility rate is so low.
“These days women say they have no obligation to reproduce and ‘I’m not going to have a baby who turns my life upside down’,” says Harper, who advised the David Cameron’s government on the implications of an ageing society.
Public services
The Treasury’s independent forecaster, the Office for Budget Responsibility (OBR), says falling birthrates are going to have a negative effect on tax receipts. That is a situation that is not necessarily solved by higher immigration.
In a recent report, it said that while every additional migrant generally boosts the level of output in the economy, “the size of this impact and the effect on per-person living standards is highly uncertain.
“The age, education, skill level, and participation rate of migrants, alongside the investment response of businesses, are all factors that determine the impact of migration on per-person output,” it said.
At the moment, the UK population is increasing – by an estimated 6.6 million to 73.7 million over the next 15 years – but the economy is on course to grow at a slower pace, meaning there is less of the financial pie to go around.
Without a healthy rise in tax receipts, governments will struggle to pay for vital services.
Schools are in the frontline of cuts as pupil numbers decline, according to the Resolution Foundation. In England, they could lose up to £1bn in funding by 2030, with exceptional falls in pupil numbers prompting closures as some establishments cease to be financially viable. Councils across the country have begun to consult local residents about mergers and closures to make the system viable.
According to the Education Policy Institute (EPI), a thinktank, the north-east is projected to see the greatest decline in primary pupil numbers, down 13% by 2028-29.
Primary school teachers could face redundancy, such is the dramatic loss of young children, says Lindsey Macmillan, an education policy expert at University College London. She says secondary schools that are now suffering teacher shortages will see the gap close as classes are cut and schools merged.
Pupil numbers had grown because of a fertility surge in the 00s, but that cohort has moved through primary and on to secondaries, leaving empty seats in their wake.
Looking ahead, even with real terms increases in per-pupil funding over the remainder of the decade, the EPI predicts that many schools will suffer funding cuts due to fewer pupils causing income to fall, though costs will remain high.
What about ageing?
Plenty of questions arise over the fact that the birthrate is falling while medical improvements are helping older people live longer. Will robots be able to look after elderly people? Could a new social contract between young and old give millennials and gen Z the security and encouragement they need to have more children? And can the UK import all the missing labour it needs, such as from sub-Saharan Africa, where births are expected to be higher?
Nik Lomax, a professor of population geography at Leeds University, says one problem faced by the next government will be how different regions are affected.
“One way of thinking about the implications of this is to assess the old-age dependency ratio – the number of people of retirement age for every 1,000 people of working age,” he says. “This reveals striking differences by geography, and will get larger over time as the number of old people relative to working age people increases.”
Just as fertility rates are falling fastest in the north-east, Wales, the south-west and parts of the Midlands, the dependency ratio is increasing in these regions too.
Harper says a clear trend shows fewer people entering the workforce and older people living longer, and not necessarily in good health.
“Men in areas that rank in the lowest third by average incomes will live until they are 80, but spend their 70s in ill health,” she says. “Men who live in the top third of affluent areas will live until their late 80s and won’t be ill or have a disability, on average, until they are 80.”
Harper says the Cameron government put ageing into its industrial strategy and considered many of the implications of falling birthrates and rising levels of ill health among a growing number of over-65s. But the industrial strategy and policy initiatives were later jettisoned.
Given that we are not going to change the dynamics of fertility rates and have women go back to producing three to four children, we need to extend people’s lives in a healthy way, Harper says.
Berrington says the implications for policymaking are “very significant – for example, the short-term decline in demand for childcare, maternity services and other parts of the economy that depend on people buying goods and services for children. “Policy responses to low fertility have tended to focus on ways to increase fertility,” she says. “However, many pronatalist policies do not work, especially cash benefits, as they tend to just bring forward in time births that would happen anyway, and not increase the overall number of births.”
Pronatalist policies – those that attempt to boost the birthrate – are also often problematic in terms of entrenching gender inequality and reducing reproductive freedom.
A report by the Social Market Foundation thinktank in 2021 said the tens of billions of pounds it would take to support an expansion of family welfare could be better spent. “We do not recommend that the government pursues a distinct ‘population strategy’ to increase the birthrate. However, the government should convene a cross-departmental working group to examine how different policies affect the birthrate,” it said.
Berrington says healthy ageing is crucial to the prospects for the economy, providing more workers and helping fill the state’s coffers.
“And governments will need to look to other policy solutions, such as increasing employment among groups which for different reasons – poor mental wellbeing, or because they have young children – have relatively high inactivity rates.”
