Britain’s birthrate is declining, and that’s bad for a lot of reasons. It’s bad because it’s part of a longer running trend towards an ageing population, with fewer and fewer working age adults shouldering an ever greater welfare burden. It’s bad because it robs a country of its youthful dynamism. But more broadly, a lack of willingness to bring new children to live in it is a strong indicator that all is not well within that country. Fears over wealth, housing, healthcare, safety, or long term stability all contribute to that general feeling, and they’re all political big ticket items.
There is an idea that things like pension contributions, healthcare costs for the elderly, and meeting demand for young workers can be met by mass immigration. Of course this is somewhat scuppered by the reality that immigrants age too. It’s an older study, but to put things in perspective, this paper from the UN suggests that in order to maintain the potential support ratio (PSR), i.e. the ratio of the working-age population (15 to 64 years) to the old-age population (65 years or older), from the year 2000 to the year 2050 South Korea would have needed to import 5.1 billion people. For Britain, it put the figure at a lower, but still staggering, 59.7 million.
Clearly, to most sane people, this is not a path that is sustainable or for many reasons desirable.
Instead, it seems more sustainable to help child-bearing age couples overcome their reticence to embark on parenthood, with many attracted by the tax breaks for larger families implemented in Poland and similar schemes in France and Hungary. But while these schemes have yielded some improvements, they fail to address the root causes of reticence — doling out tax breaks in a country with sclerotic growth has something of the “putting spoilers and racing stripes on a 1 litre Vauxhall Corsa” about it. To throttle the analogy to death, none of it makes any difference when regulations mean the whole country is grinding away at 20 mph anyway.
The other problem is that the majority of decisions made by a couple that put them in a position where they feel safe and secure about the prospect of raising two or more children happen long before they have had their first child. Which is why such narrow targeting is so often ineffective. Instead Britain should implement broad tax cuts for all, instead of selective incentives for families. They should empower individuals to accumulate wealth, trust that this will lead them into making autonomous family decisions, and so fostering organic fertility recovery through economic freedom.
The most recent data for England and Wales indicated that the total fertility rate, that is the average total number of live children that a woman can expect to have across her child-bearing age, declined to 1.41 in 2024, down from 1.42 in 2023, and the lowest number since comparable data was first collected in 1938.
This drop occurred despite a 0.6 per cent increase in live births last year, with the disparity arising from the large increase in the UK adult population through immigration.Of course it’s not just Britain that is suffering from this phenomenon. Japanese TFR fell to a record low of 1.15 in 2024, doing nothing for its aging population issues and we’re all familiar with the stories from South Korea where sales of prams for dogs outstrip prams for babies. In Europe, Italy’s aging population has pushed pension expenditure to 18 per cent of GDP with young people often choosing to leave the country rather than bearing the burden of financing retirees.
That’s not to say that there aren’t countries that have achieved an uptick in their TFR through targeted measures. But at what cost and for how long?
The example that has has plenty of more communitarianism-leaning types randy for more is that of Poland, where President Karol Nawrocki introduced the “PIT Zero for Large Families” policy, exempting parents of two or more children from the personal income tax (PIT) up to PLN140,000 pa (roughly £28,000) and worth up to £15,000 pa for a high-earning couple.
On the face of it, it’s all good stuff. But what receives less attention is that this measure follows a similar scheme in place in Poland in place from 2016 to 2023 which yielded a short-term TFR uptick of 0.1-0.2 (from 1.29 to a 1.46 peak in 2017), but faded away to 1.16 by 2024.
France is perhaps the most effective example of pro-natalist policies — it’s the country that boasts Europe’s highest TFR (although at 1.8 its still well below replacement level) and it achieves it not through tax breaks alone, but by highly subsidised childcare, housing assistance, and a 35-hour workweek. You’re certainly not getting something for nothing though, with France’s social charges being eye-wateringly high for those on middle and high incomes and this is something that seems to be reflected in the TFR across incomes with a “polarisation of fertility” with women in the top and the bottom part of income distribution having more children. There is also the trend that is seen across developed countries that having children — and in particular having multiple children — is seen as a luxury to natives, but not to immigrants.
Parenthood is not something that can be siloed away outside of the rest of economics
This dip in the middle of the income distribution, primarily for native-born mothers, is of course absolutely key to getting the average up (immigrants tend to converge on native birthrates within a generation or so, with differences in union formation being the main thing that survives naturalisation).
This subject is unavoidably riddled with what many might see as middle class anxieties — about living in the right area, near good schools, and being able to continue to enjoy a pleasant lifestyle while raising children. That’s largely because getting the middle classes to have children is what the whole game is about, but also because of course parents should have access to good schools, and they should be able to enjoy a high quality of life. Even an expensive portion of avocado on toast from an upmarket café is pretty cheap when compared with the cost of maintaining the triple-lock system of unemployment benefits for the over 67s. But the general theme is that there is a rising perceived income threshold for parenthood.
In attempting to find an explanation for the baby boom of the 1930s, the economist Richard Easterlin arrived at what we know as the Easterlin theory of relative socioeconomic status. It has its weaknesses, but those to some degree are a function of the multifactoral nature of parenting decision making. However, it’s a hypothesis that makes a lot of sense, and so it’s worth considering, and it rests on the idea that potential parents are not swayed into having children by their absolute income so much as they are by their relative income — primarily in comparison to what they had expected their adult material conditions to look like when growing up.
It’s a theory that fits conveniently onto Britain in 2025. Those currently making parenting decisions were raised in a country still enjoying the economic momentum of Margaret Thatcher and they internalised the typical material norms of the 1990s and 2000s; home ownership, two cars on the driveway, regular foreign holidays, perhaps private education, followed by debt-free university, and a general sense of an upward trajectory. Contrast that with a Britain of today and you can see why potential parents-to-be might be left feeling less than secure about the world in which they might want to raise a child.
If your objective is to create an environment where people with no children have a first child and parents with one child have another, then tax incentives deliberately targeting that behaviour are predicated on nudging decision-making within a narrow window. However, if it is true that would be parents want to see a lifestyle that at least matches their childhood expectations, then the things they need to do to achieve that happen long before the birth of their first child, let alone their second or their third.
Housing, careers, wealth accumulation are the big things that feed into those material conditions. Which brings us back to why some conservatives are often so attracted to child-specific tax policies in spite of their weak effects on birth rates. It is perhaps the “This One Neat Trick Will Cure Everything”ness of these policies that makes them so attractive, but the reality is that parenthood is not something that can be siloed away outside of the rest of economics.
Unfortunately they’re probably going to have to face up to the reality that we’ve just got to make people’s lives better and trust they’ll use that prosperity to bring children into the world — and if you believe that personal freedom, low taxes, and a vibrant entrepreneurial economy are the way to achieve that prosperity, then you should probably find the courage to advocate for those things for all.
If we think parents may need housing in cities close to employment,we need to liberalise planning while ceasing the nonsensical policies of housing welfare recipients in prime areas. In order to make women feel comfortable with the daunting prospect of pregnancy, we need to reform and overhaul the NHS and if we believe a society where it’s easy to accumulate wealth will encourage people to have children, we ought to slash state interventionist impediments towards that goal.
If at the end of it all, this somehow fails to boost the TFR, we’ll have still made Britain a happier, healthier and more prosperous country.
