Britain will become a ‘super-aged’ nation – a cause for doom and gloom?

Ratings agency Moody’s have released a report this week entitled “Population Aging Will Dampen Economic Growth over the Next Two Decades”. According to this announcement on their website, they predict that the pace of ageing will slow economic growth over the next 20 years in both developed and emerging market economies, as working-age populations shrink and household savings rates decline. They describe this as ‘a demographic tax’. The full report seems only to be available at a cost.

The story has been picked up here by the Daily Mail, under the heading ‘Super-aged Britain: One in five will be 65-plus in a decade…with dire economic impact, say experts’. The article is illustrated with some colourful tables and a selection of stock photos of ‘older’ adults from around the world.

So what is super-ageing? Moody’s define this as ‘populations with more than 20% elderly’ (and by ‘elderly’ I think they mean aged 65 or over – I don’t imagine that’s a definition that will meet with much approval).  The so-called demographic tax is said to be the combined effect of:

• lower production due to fewer people being of working-age
• declining rates of household saving
• the need to support more retired and elderly people
  

Do we believe all this doom and gloom? Are Moody’s in fact ‘experts’? For a fascinating analysis of Moody’s and other ratings agencies, see this piece in The Guardian. It makes the points that ‘more people would trust the agencies if they hadn’t got so much so wrong so recently’ and that ‘it is claimed the agencies do not deal robustly enough with the companies who pay them. On the other, it is said they are too aggressive with the companies who don’t.’ So maybe we need to take this talk of a super-ageing disaster with a pinch of salt, particularly given the rise in what is considered ‘working age’ in the UK.