The world’s ageing population is sending us into a deepening debt crisis
The world's ageing population is causing a huge pile of debt to build up, the European chief executive of Goldman Sachs Asset Management has said.
Andrew Wilson, head of Europe, Middle East and Africa (EMEA) for the investor, warned that it would be impossible to pay off national debts under the current system because of the "major issue" presented by changing demographics.
“With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we've managed to do in the past," he told The Telegraph.
With "too much" debt in the system, and no way of paying it off, Wilson warned that "new ways of thinking at a policy level" were necessary to stave off wider risks to the economy.
He highlighted Japan as a prime example of a developed country suffering under the burden of age, with government debt now up at 200 per cent of GDP.
The Organisation of Economic Co-operation and Development (OECD) has predicted this could rise to as much as 400 per cent by 2040 without swift reforms.
So what's to be done? According to Wilson, there is hope for all countries, and it comes down to creative policy-making. "The demographic shift means that we need to look to more creative policy, including immigration and workforce expansion in order to find ways to pay down debt,” he said.
“This is happening in Japan in the form of [prime minister] Shinzo Abe's drive to increase female labour participation and via efforts to boost inflation."