(FT) Falling birth rates raise prospect of sharp decline in living standards

Many of the world’s richest economies will need to at least double productivity growth to maintain historical improvements in living standards amid sharp falls in their birth rates.

A McKinsey report investigating the economic impact of declines in birth rates found that the UK, Germany, Japan and the US would all have to see productivity rise at double the pace seen over the past decade to maintain the same growth in living standards witnessed since the 1990s.

The consultancy’s report, published on Wednesday, showed that to match GDP per capita growth between 1997 and 2023, productivity growth in France and Italy would need to triple over the coming three decades. In Spain, it would need to rise fourfold between now and 2050.

The report highlights the stark impact of declining birth rates on the world’s most prosperous economies, leaving them vulnerable to a shrinking proportion of the population of working age.

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💥 "Many of the world’s richest economies will need to at least double productivity growth to maintain historical improvements in living standards amid sharp falls in their birth rates."

Falling Birth Rates Raise Prospect of Sharp Decline in Living Standards @FT pic.twitter.com/18gmETDuDS

— James Pethokoukis ⏩️⤴️ (@JimPethokoukis) January 15, 2025