Urban Youth vs. Ageing Regional Electors in the U.K.

The England and the U.K., like much of the developed and now developing world has an ageing population, even more so electorally, which is having a significant impact upon democracy and the economy, at the expense of younger generations.

Regional England and Ageing Demographics (Image copyright Pexels)

Not only are politicians catering to ageing and regional electorates, younger generations although ignored, are expected to support older generations through the tax system, but will not receive similar state benefits in future due to budget impairment.

From The Guardian:

‘Some parts of UK ageing twice as fast as others, new research finds
Study by thinktank Resolution Foundation warns divergence will have political and economic impacts.

Parts of the UK are ageing twice as fast as other areas of the country, while in some cities the population is getting younger, a divergence that will have a lasting impact on local economies, local government and national politics, according to new research.

A study by the Resolution Foundation, an independent thinktank, found that the populations of Maldon in Essex, Copeland in Cumbria and Richmondshire in Yorkshire are ageing twice as fast as the rest of the UK, while Nottingham and Oxford are growing younger.

The report, entitled Ageing, fast and slow: When place and demography collide, said that while the UK population as a whole is ageing – one in four will be older than 65 by 2041 – there are widespread divergences in the pace and even the direction of ageing.

The UK’s average age has been rising steadily, from 36 in 1975 to 40 today, but there is a 25-year gap between the oldest and youngest local authorities: North Norfolk, where the average age is 54, and Oxford, where it is 29, reflecting its large universities, the Resolution Foundation said….

….Charlie McCurdy, researcher at the Resolution Foundation, said: “Everyone knows we’re getting older, but how and where this ageing is taking place is less well understood.

“Britain is growing apart as it ages because many rural and coastal communities are welcoming fewer babies each year, while migration within the UK and from abroad has seen younger people concentrating in urban areas that are already relatively young.”

Middle-income areas are ageing fastest, while the richest and poorest areas age the slowest, the research found. There are two key drivers: young people are leaving rural and coastal communities, which are already older on average than other locations, for urban areas, and low local birth rates are a key factor in ageing in older communities.

Poorer urban ethnically diverse areas are ageing more slowly because of high birth rates. The high birth rate in Barking & Dagenham – 19 births per 1,000 people, compared to 11 in the UK as a whole – has given it the highest proportion of under 18s in the country (30%).

The think tank says increasing divergence between old and young areas will have a lasting impact on local economies, local governments and national politics.

MPs are becoming increasingly reliant on the demographics of their constituencies, with older and younger seats becoming safer for the Conservatives and Labour respectively.

For local economies, the foundation says that policymakers should tailor their economic strategies to local demographics, including benefitting from the potential of young graduates, or the greater spending power of pensioners.'

For more articles and blogs about demography, population growth and economy click through.

Ageing Populations and Monetary Policy

Australian economic, political and social narratives focus upon ‘high immigration rate’ and ‘population growth’ as negatives, claiming in first article following from The Conversation that the latter masks low or declining economic growth.  On the other hand, VOX CEPR suggests a linkage between ageing, longevity and declining per capita GDP; increasing numbers of retirees may well be a significant cause?

Ageing populations and declining per capita GDP (Image copyright Pexels)

'Vital Signs: Australia’s sudden ultra-low economic growth ought not to have come as surprise

March 7, 2019 1.28pm AEDT

Australia’s big little economic lie was laid bare on Wednesday.

National accounts figures show that the Australian economy grew by just 0.2% in the last quarter of 2018. This disappointing result was below market expectations and official forecasts of 0.6%. It put annual growth for the year at just 2.3%.

But the shocking revelation was that Gross Domestic Product per person (a more relevant measure of living standards) actually slipped in the December quarter by 0.2%, on the back of a fall of 0.1% in the September quarter…..

Population growth hides it

The more insidious answer in Australia is that, for a long time, our high population growth, fed by a high immigration rate, has masked a much less rosy picture of how we are doing. And neither side of politics has wanted to admit it.

At 1.6% a year, Australia’s population growth is roughly double the OECD average, which is perhaps why we hear politicians say things like “Australia continues to grow faster than all of the G7 nations except the United States,” as Treasurer Josh Frydenberg did this week.

The good news is that standard economic theory tells us that in the long run, immigration has very little impact on GDP per capita in either direction, unless it drives a shift in the population’s mix of skills.

But in the short term, it depresses GDP per capita because fixed capital such as buildings and machines has to be shared between more workers….

But the fundamentals of the Australian economy are looking somewhat weak. Like the US and other advanced economies, we are living in an era of secular stagnation – a protracted period of much lower growth than we had come to expect.

And until we do something to tackle it, such as a major government investment in physical and social infrastructure, we will continue to face anaemic wage growth, shaky consumer confidence, and mediocre economic growth per person.'

'The impact of population ageing on monetary policy

Marcin Bielecki, Michał Brzoza-Brzezina, Marcin Kolasa 05 March 2019

Population ageing is likely to affect many areas of life, from pension system sustainability to housing markets. This column shows that monetary policy can be considered another victim. Low fertility rates and increasing life expectancy substantially lower the natural rate of interest. As a consequence, central banks are more likely to hit the lower bound constraint on the nominal interest rate and face long periods of low inflation, especially if they fail to account for the impact of demographic trends on the natural interest rate in real time.

Many countries, developed and developing alike, are experiencing a process of population ageing – fertility rates remain below the level that guarantees the replacement of the population and the average life expectancy at birth keeps increasing. As a consequence, the ratio of the elderly to the working-age population – the old age dependency ratio – has been, and will be, increasing over the upcoming decades. To give some idea on the magnitude of this process, while the ratio of elderly (aged 65 or more) to the working-age population (aged 15-64) in the euro area was around 0.25 at the turn of the 21st century, the proportion is projected to exceed 0.5 by 2050 (see Figure 1).

The demographic transition will have many consequences related to various aspects of economic activity. To mention just a few, the increasing share of elderly in populations is likely to negatively impact the growth rate of GDP per person (Cooley and Henriksen 2018) and the sustainability of pension systems (Boulhol and Geppert 2018), and will lead to an increase in the share of GDP being spent on healthcare and related services (Breyer et al. 2011)….'

For more articles about population growth and NOM net overseas migration click through.