Thursday 5 May 2016 11:27 am

Standard and Poor’s says the UK’s ageing population could result in a massive increase in UK debt


I'm City A.M.'s economics reporter, looking at the news, stories and data that move markets in the UK, Europe and around the globe. I also cover broader developments in the business and political worlds at home and abroad.

I'm City A.M.'s economics reporter, looking at the news, stories and data that move markets in the UK, Europe and around the globe. I also cover broader developments in the business and political worlds at home and abroad.

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Ageing populations will cause debt levels in advanced economies to reach potentially unsustainable levels over the next three decades, Standard and Poor’s (S&P) has warned today.

The ratings agency said that without policies which address high – and increasing – levels of public spending that are going towards supporting older populations, credit ratings would be cut, causing the cost of borrowing to shoot up.

The total debt-to-GDP ratio of the 58 major economies studied by S&P would triple from 43 per cent today to 130 per cent in 2050 if governments do not take action.

Read more: The government's latest deficit target lasted just five weeks

“We believe that nearly all countries will face a steep, demographically driven deterioration in public finances in the absence of further policy actions, particularly to curb rising costs of health and long-term care combined with policies that boost growth,” said Marko Mrsnik, sovereign analyst at S&P.

In the UK, S&P warned that Britain’s gold-standard triple-A credit rating would be slashed by two notches to ‘A’ as government debt levels rise from 84 to 130 per cent of GDP by the middle of the century.

The Conservative government has pledged to maintain policies such as the triple-lock on pensions, which means the state pension rises every year by the highest of price inflation, earnings growth or 2.5 per cent.

Read more: Services PMI rounds off hat-trick of woeful economic news

Pressure on public health and social care services are also expected to grow as the UK’s age-old dependency ratio – the proportion of people over the age of 64 compared to the working age population – will rise from 27 to 41 per cent by 2050.


S&P currently has a negative outlook on the UK's credit rating, meaning that a downgrade is possible. If it votes to leave the European Union, ratings agencies have warned that it will likely result in it losing its triple-A rating.

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