Comment

Britain must reverse the baby bust to avoid an Italian decline

The UK’s demographic problems are likely to worsen after Covid as young people bear the brunt of the crisis and immigration falls

The pitter-patter of tiny bambini feet has been even harder to hear in Italy over the past 12 months after the pandemic struck a nation already bearing the sorry label of Europe’s biggest demographic disaster zone.

At the end of last year, births plunged by almost 22pc across 15 Italian cities nine months on from the beginning of the lockdown. If Auguste Comte’s famous dictum that “demographics is destiny” is any guide, it spells more bad news for a country which already has the highest share of over-65s in Europe, at 22.8pc. 

Italy’s total fertility rate has been declining for decades to stand at 1.3 births per woman, far below the 2.1 “replacement rate” to replenish population, absent migration. Early in the pandemic, more than a third of couples abandoned plans to procreate, and Guiseppe Conte’s administration turned to bribes in a bid to turn the demographic supertanker last June with plans for monthly payments of up to €240 (£205) for new mothers under a new Family Act.

On this side of the Channel the fertility rate is higher, standing at almost 1.7 in England and Wales in 2018. But there are enough warning signs for ministers to be concerned about slipping into an Italian-style trap. 

The latest comes from Southampton University’s Centre for Population Change, which weighs up a myriad of factors such as 200,000 delayed weddings, frustrated chances to socialise and economic uncertainty. It comes up with a worst case scenario of 66,000 fewer children born in 2023 if the previous downward trend in fertility is combined with a Covid ‘baby bust’. It estimates that the fertility rate already slipped below the previous lows of 1977 and 2001 to just 1.6 in 2020 – but could fall even closer to Italian levels by 2023 at 1.45.

Idiosyncrasies have deepened the Italian problem, such as much lower female participation in the workforce, which is linked to lower fertility. In a traditionally Catholic country fewer Italian children are born outside of marriage and they live in the family home for longer. Meanwhile economic uncertainty and a lack of job opportunities prompted almost 160,000 Italians to emigrate in 2018: some 21,000 chose to come here. 

But there are also similarities which should strike a worrying chord in the UK, such as a patchy and expensive childcare system and a decade-long hangover from the financial crisis which is hampering the ability of young people to “transition” into adulthood and start families. Since 2000, for example, the share of British 20-34 year olds living at home has risen from 20pc to 26pc, with almost a million more people now living with their parents.

While the UK does not share Italy’s cultural ties to the family home, the story is more about affordability following a decade of virtually stagnant pay for younger cohorts now entering what is supposed to be their demographic prime. 

The Institute for Fiscal Studies pointed out in 2019 that the age group that had done worse since the financial crisis were those in their 30s, who emerged into the jobs market in the 20s in the immediate aftermath of the recession and are still suffering average earnings 7pc below the pre-crisis level for their age.

The average age of first-time buyers in the property market has crept up to 32 in England, and 34 in London, and research shows the rise of the private rented sector is bad news for fertility as parents are exposed to the greater uncertainty it brings such as the unsettling effect of potentially being forced to move their offspring around schools. 

Other ingredients in this unappetising demographic dish include the impact of ultra-loose monetary policy since 2009 which has sent cash into assets like homes in a search for yield due to ultra low interest rates. That has pushed up prices along with the Government’s Help to Buy initiative, fuelling a scarcely interrupted jamboree for housebuilders since George Osborne introduced the scheme in 2013. 

The result of these myriad factors is that the very age group which we would usually expect to do the population “heavy lifting” (so to speak) has been the biggest economic victim of the past few years. 

This requires some hard and radical thinking from ministers, especially as lower immigration acts as another handbrake. The previous all-time low for fertility was in 2001, on the cusp of a wave of immigration from the European Union accession countries; whatever the societal implications of the influx ahead of the Brexit vote, the arrival of younger workers was a boon for population growth. 

The Migration Advisory Committee modelled what happened in 2004 against the Labour Government’s original more restrictive proposals and found the overall population would have been more than 3pc smaller with a similar drop in overall output. Following Covid, the population tailwind has partially reversed with more than 180,000 EU workers dropping off company payrolls in the past year, according to the Office for National Statistics. Some estimates put the UK’s population fall as high as 1.3m in the past 12 months. 

Migration is likely to be permanently lower under the points system, so the Government needs to pull supply side levers. Its mortgage guarantee scheme for first time buyers risks exacerbating the affordability problem if it simply encourages demand without impetus to supply. Conservative backbench opposition to last year’s planning White Paper was depressingly predictable, but speeding up the delivery of affordable new homes is probably the best hope for prising young people away from the parental hearth and getting on to making babies.

The CPC’s demographics professor Ann Berrington suggests “small cash benefits” for would-be parents are unlikely to work: the Government instead needs to look at a range of more family friendly policies and more generous subsidies for childcare, where the UK ranks among the most expensive in the world according to the OECD.

Boris Johnson has looked after the old, through lockdown – and through the preservation of the pension “triple lock” – but now he needs to offer something to the young. Labour data shows young people bearing almost two-thirds of the fall in employment since the pandemic struck: the danger is the same sorry saga of the financial crisis will be played out again, and the UK will follow Italy further down a barren path.

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