Demographic dislocation: should we be worried?

11 mins. to read
Demographic dislocation: should we be worried?

In the wake of the coronavirus pandemic, birth rates are plummeting. This may be more than just a temporary response to the public health emergency. If the conventional demographers are wrong then we are in for a shock, writes Victor Hill.

Demographics is destiny” – Auguste Comte (1798-1857), French philosopher and writer.

Baby bust

When much of the advanced world went into strict lockdowns in the spring of last year, borders were shut and millions were told to stay at home, many of us thought that there might be a coronavirus baby boom in 2021. However, something quite unexpected has happened: birth rates are plummeting almost everywhere.

In Europe, birth rates have declined by about one fifth overall. In Italy, births recorded in 15 cities fell by 21.9 percent in December 2019 as compared to the year before. In Spain it’s about 20 percent. In France, births have dropped by 13 percent. In the USA, the seven percent decline in babies born in December last year and January this year means that, prospectively, a quarter of a million fewer American babies will be born this year than would have been expected. In South Korea there was a 7.8 percent fall in births in December.

Britain’s fertility rate is thought to have plummeted to the lowest level on record during the pandemic at 1.6 children per woman – even below its previous low point in 2001 of 1.63. But 20 years ago, the prospect of a population decline was mitigated by a wave of immigration from the EU, and in particular from the newly acceded countries of eastern Europe after 2003. The University of Southampton’s Centre for Population Change (CPC) warned recently that up to 66,000 fewer babies could be born in the UK by 2023.

But the pandemic seems to have accelerated an existing trend (as in so many other areas). One reason suggested is that when couples saw the horrific scenes of what was happening in hospitals during the early part of the first wave, they decided to put baby plans on hold. Even though we now know that women of child-bearing age are relatively unlikely to be grievously afflicted by Covid-19, and the chance of their passing on the virus to their unborn babies is near-zero. (Though we didn’t know that at the time.) According to research by King’s College London, half of women of child-bearing age changed their plans in the face of the pandemic. But most said they were postponing, rather than cancelling, their plans to have children.

A second reason is that there were more young people living at home whose social lives were severely limited by the restrictions, resulting in a distinct lack of dating opportunities. A third is that 200,000 weddings were cancelled in the UK alone last year – though presumably these will yet take place once we get back to something approaching normality. A fourth reason is that millions of people feared losing their jobs due to the prevailing economic uncertainty.

The CPC expects that Britain’s fertility rate will fall further over the next 2-3 years – especially amongst those aged under 30 and young adults who are currently childless and in paid work. The unit’s modelling suggest that 689,984 babies were born across the UK last year. But under its extreme scenario that will fall to 623,933 by 2023. That might not seem much – but just consider that that’s about three thousand fewer kindergartens required in 2027-28.

If we combine this with an elevated death rate over 2020-21, we get to a very probable population decline in the UK, at least in the short-term. Not to mention the phenomenon of self-repatriation, whereby a lot of those post-2003 immigrants from Eastern Europe and elsewhere are returning to the lands of their birth. 180,000 EU workers have disappeared from company payrolls according to the ONS – and that is probably an underestimate. That is partly to do with the dislocation of Brexit (though several million EU nationals have elected to take up permanent residence in the UK) and partly because Poland, Slovakia and elsewhere are much more salubrious places to live than they were 18 years ago.

Britain has also had a severe death rate from Covid-19 in the under-65s when compared with our near neighbours. By the week of 18 December last year (just before the second wave of the pandemic kicked off in earnest) the death rate for under-65s in the UK was 7.7 percent above the five-year average. Just why this is the case is something I would like to consider soon.

A secular trend

Fertility rates were already in decline in many advanced countries long before Covid-19 hit the headlines. Fertility rates in North America and Japan have been below replacement levels for decades. Even western countries with relatively higher birth rates – the UK, France, Scandinavia – would have experienced population decline in the 21st century if not for immigration. In these countries small family syndrome is the norm – most couples prefer to stop at just two children.

Even in China, where the One Child Policy has been relaxed, there seems to be a reluctance on the part of modern couples to have more than one child. This is for social and economic reasons. Most women work; childcare – even in China – is relatively expensive; and there is a growing sense in a nation of high-achievers, that one child benefits more from a limited education budget. Middle-class Chinese parents expect their child to play (at least one) musical instrument, to speak (at least one) foreign language and to attain (at least one) honours-level degree. That is still not the case in India; but India’s middle class is on the rise and is increasingly following the secular trend of smaller families, even if provincial Indians are still prolific.

Then there is evidence that, in the rich world, many couples are now reluctant to start a family because of environmental concerns. Either they don’t want to bring a child into a world destined for imminent climate catastrophe; or because they don’t want to contribute to the number of mindless consumers who are trashing the planet. Many observers on both the left and right think this is misguided.

But the old-fashioned conservationist (that is, conservative with a small-c) view, out of fashion for many decades, but now articulated by people such as Sir David Attenborough, is that the best thing we could do to ensure the future vibrancy of Planet Earth would be to reduce its human population to sustainable levels. When I was born, the global population was 2.9 billion: now it is nudging eight billion[i]. No wonder there has been widescale environmental degradation.

What is possibly worrying is that children will continue to be born in increasing numbers in countries where they are not likely to receive the education that they could attain if they were born in countries with lower birth rates such as Britain, Japan or Canada. There is only one developed country which bucks the trend of declining fertility rates. In Israel, three children are born for every woman (that includes Israel’s Palestinian population). But then modern Israel is largely a nation of migrants (within at least two and certainly three generations). And its flourishing economy and cultural life continue to attract people of Jewish heritage from all over the world to settle there.

Sociology meets technology

This is slightly beyond my remit: but here goes. Apparently, young men are having less sex in the developed world than ever before. There are various statistics which show that they are having their first experiences much later than even a decade ago. What is going on? Many things, of course.

Mental health issues seem to be to the fore unlike in my day – and certainly what my generation would have called sadness/ disappointment/ being generally fed-up and anxiety is now medicalised as clinical depression and/or mental illness by the mental health industry. As the sociologist, Professor Frank Furedi wrote recently, the mental health industry which warned us of the dire psychological effects of lockdowns on young people is now warning that the experience of coming out of lockdown could trigger extreme anxiety for many.

What really struck me when reading around this was a sentence written in an article by the writer and commentator Chloe Combi:

It seems no coincidence that sex started to fall off a cliff at the exact point we all got smartphones…[ii]

I suspect that that is a hugely perspicacious insight – and one I’m still reflecting on. There’s a whole doctoral thesis in there. Something socially fundamental has changed in the world of smartphone internet access. If, as the English poet Philip Larkin famously wrote, sex began in 1963[iii], it finished around 2009 at the time of the financial crisis. Perhaps it is because the internet has made us all voyeurs of one kind or another. The cultural shift away from text to images is, I think, accelerating as Instagram displaces other text-based media. That’s worrying for language-lovers like me.


Italy’s fertility rate has been lower than Britain’s for some time – despite the continued disapproval of the Catholic Church to the contraceptive pill. It now stands at 1.3 births per woman – well below the rate of 2.1 reckoned to sustain a population in the absence of migration. But then Italy has had a very patchy growth record – certainly since the advent of the single currency in 1999. And more than one quarter of 24- to 34-year Italians are still living with their parents. The question is: is low fertility a function of sluggish economic growth; or is slow growth the result of low fertility? Italy’s sluggish growth is not entirely explained by its demographic challenge.

Most economists take the view that more people means more consumption and thus more GDP, and vice versa. And most demographers anticipate that the human population will continue to rise until late this century. India is likely to become the most populous country in the world, overtaking China by the end of this decade. Nigeria will become the third most populous country in the world by 2050, even as the population of China falls. Most of the population growth in the second half of the 21st century will take place in Africa, which will vie with Asia as the most populous continent by 2100. To the extent that richer countries have declining populations and poorer countries continue to have rising ones, there will continue to be flows of migrants from the south to the north.

But the standard demographic models could be wrong – and the result of a falling population will not necessarily be bad. In the future – the next 50 years – the rise in productivity attributable to AI and robotisation (which are in fact the same thing, in my view) will more than offset any decline in output caused by a smaller human population. So those humans who remain will be better off in terms of GDP per capita and their quality of life will most likely be better. The pressure on the natural world will lessen – the biggest threat to endangered species such as the African elephant is habitat loss. There will be less pollution, and less plastic waste.

A recent research paper issued by the Research Institute for Humanity and Nature in Kyoto found that, thanks to consumerism, an average of four trees are felled somewhere in the world per person each year. Despite the global pandemic, the Amazon rainforest suffered its highest level of deforestation since records began in the first half of last year according to the journal Nature Ecology and Evolution. Much of the valiant work in securing lower carbon emissions and rolling out carbon capture and storage in advanced countries is being undone by those who still deforest in Brazil and elsewhere.

A permanently growing human population is unsustainable and would eventually lead to ecological disaster – so there will have to be a re-set at some point. That re-set may already be in progress – much sooner than mainstream demographers expected. And a world in which there were fewer people would be a world with significantly lower carbon emissions.

Implications for investors

The biggest macroeconomic impact of a world in which the human population is falling is the risk of systemic deflation gaining hold. Property prices might come under downward pressure as supply outstrips demand. Commercial property prices are already under siege as people desert the high street and choose to work at home. That has important implications for pension funds which hold long-term property portfolios. And banks would be exposed as loan losses increase when asset prices fall, and the value of collateral diminishes accordingly.

Good quality agricultural land would most probably maintain its value so long as food prices remain stable. Financial assets would be vulnerable to any sustained wave of deflation – but there will no doubt continue to be good opportunities in the equity markets. Spending patterns would change as costs associated with raising children decline. On the other hand, that implies more resources for the fewer children born.

Overall, I don’t think we need to worry too much about a declining fertility rate, and there are many reasons to welcome it.

[i] See:

[ii] Daily Telegraph, 29 March 2021, available at:

[iii] Annus Mirabilis by Philip Larkin (1922-1985).

Comments (3)

  • Cryonica says:

    What about the effect of regenerative medicine which, it is believed, will rejuvenate baby boomers in the developed world from 2030 and onwards? It may mean that population slowly grows again, and that house prices keep rising since homes are not vacated by their (no longer ageing) owners.

  • Paul says:

    If you want to know what its like with a declining population go to Bulgaria
    For 10 000 euros you can buy a farmhouse with land. Nice.

    Why bother when there is a 50% chance of divorce and 80% are started by women…..LOL….as an investment the risk reward is terrible.
    The men then end up paying for her and the kids for years.

    Are we that stupid ?

  • paul says:

    As for marriage…..why bother
    When there is a 50% divorce rate……..and 80% are started by women…..
    LOL…..for a man as a financial investment, the risk to reward is terrible.
    The men then end up paying for her and the kids for years.
    Are we that stupid ?

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