Stephen Booth is Head of the Britain in the World Project at Policy Exchange.
This week the world’s population reached 8 billion people, according to the latest United Nations data. In another 15 years it is expected to hit 9 billion, before peaking at 10.4 billion in 2080. While the twentieth century saw a population boom, doubling from 3 to 6 billion between 1960 and 2000, it has long been known that population ageing will be the dominant demographic trend of the twenty-first – a result of declining fertility and a welcome increase in longevity.
In 2020, the global population growth rate fell under one per cent per year for the first time since 1950. By 2050, the number of people aged 65 years or over worldwide is projected to be more than twice the number of children under age 5 and about the same as the number of children under age 12.
Although every country in the world will experience this phenomenon, there are considerable differences in how ageing will affect different countries and regions of the world in the coming decades. For example, about 30 per cent of Japan’s population is already aged 65 and over, while in Europe the proportion is 20 per cent, double the global average and the highest of any continent.
Many EU countries are now at the point of tipping over into a period of depopulation. With the exception of France, the EU27’s most populous member states – Germany, Italy, Spain, and Poland – are all entering a period of population decline. The total EU population is projected to fall from 444 million in 2021 to 421 million in 2050, and 389 million in 2070.
In per capita terms, the economic advantages of developed countries will persist for many years but population ageing and decline is likely to have profound implications over the long-term. After all, ten years ago, Angela Merkel famously warned that the European social model was becoming unsustainable. “If Europe today accounts for just over seven per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life,” she said.
Absent a major boost to productivity, ageing will weigh on growth as working age populations decline. Meanwhile, ageing societies will place increasing fiscal demands on governments’ social spending. These impacts can be mitigated by government policies, such as increasing workforce participation, increasing immigration, and increasing retirement ages. However, these policies are politically difficult. Major increases to immigration potentially risks community cohesion. Equally, as voters get older, later retirement ages are a trickier sell.
Last year, when he was still Finance Minister, the German Chancellor, Olaf Scholz, rejected the view of his ministry’s economic advisors who called for an increase in the retirement age to 68. In October this year, Rainer Dulger, President of the Confederation of German Employers’ Associations, warned that the costs of the pensions system are set to “explode” without further “large-scale social reform”.
The UK is not immune from the fiscal pressures from ageing. The OBR has previously estimated that age-related spending in the UK is projected to rise significantly – from 23.0 to 26.2 per cent of GDP – between 2025 and 2065. However, the problem is less acute than elsewhere in Europe because the UK’s population is predicted to continue rising well into the century, increasing from 67 million to 72 million in 2050, and remaining at 72 million in 2070.
The UK cannot escape its geography – its political and economic relationships with the European powers remain fundamentally important. However, the demographic changes underway across the globe, in combination with broader economic trends, are likely to have important geopolitical implications for the UK’s place in the world.
In contrast to Europe, the United States’ population is projected to continue growing from 337 million in 2021 to 387 million in 2070 – at which point it would be roughly the same size as the EU27. It should be noted that the US is projected to grow not because of higher fertility rates (they are also well below replacement) but because of immigration.
The US is not a superpower in decline – it will become even more important relative to Europe. This will be pertinent when it comes to questions such as defence expenditure as a share of GDP, for example. The total population of the Five Eyes countries – the UK, US, Canada, Australia and New Zealand – will grow from 473 million in 2021 to 550 million in 2070. Compare that to an EU27 population of 389 million in 2070 and the world looks rather different.
Meanwhile, India is projected to surpass China as the world’s most populous country during 2023. By 2070, it is expected to have a population of 1.7 billion and China 1.1 billion. India still has a long way to go to reach Chinese levels of economic development but increasing trade and security ties with the country is understandably a key UK priority.
Similarly, despite a shrinking Japan, the population within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) grouping is expected to grow from 511 million in 2021 to 534 million in 2070, with Mexico and Vietnam the largest in the bloc.
According to World Data Lab, Asia has been the driver of middle-class growth since 2000, and this trend will continue throughout this decade. The continent is now home to the world’s largest consumer market, both in terms of people and spending. Taking the long-term view, the Indo-Pacific tilt is not a reflexive reaction to Brexit, it reflects the future reality.
Equally, Africa will provide an increasing share of the global population. More than half of the projected increase in global population up to 2050 will be concentrated in just eight countries, five of which are in the continent. Nigeria, which will more than double in population size throughout the century, was rightly identified by the Integrated Review as one of the more important countries for the future of the UK. It has a regionally significant role and its diaspora population of around 200,000 in the UK is one of Britain’s largest foreign-born groups.
Demographics aren’t necessarily destiny, but they are likely to be an increasingly large part of the story in the twenty-first century. The UK is relatively well placed relative to the rest of Europe, but Europe’s waning numbers make Global Britain a necessity.