Should the number of UK babies fall as low as current bambini birth rates in Italy it would cause real problems for the finances of both the government and individuals in the UK, says a major new report on UK population trends.

The More Babies? Report from the Actuarial Profession makes new projections based on as yet unpublished data that demonstrates graphically what a sizeable impact change in the birth rate can have on the total size – and age profile - of the population.

This will in turn have important long-term social implications for the UK, in terms of pension, social security and healthcare costs. It will also impact upon decisions about how much we need to spend supporting the raising of children.

Today, Italian women are having only 1.2 babies each, on average. This low birthrate has so worried the Italian government that first time mothers are now being paid £700 each to encourage bambino numbers back nearer to the population replacement level of two, reported the The Times, tabloid edition.

Should the UK birth rate drop to the current Italian level, the UK population by 2050 would be just 55m, a fall of 8.5% compared to now. With only 1.9 adults aged 18-64 for each person over 65, the finances of both government and individuals could face real difficulties.

A falling population is by no means inconceivable. Currently, women in Scotland, which has the lowest birth rate in the UK, are having as few as 1.4 children each, on average. This means that the number of Scots is set to fall by 14%, from 5m today to just 4.3m in 2050.

Conversely, the increasing longevity of the current population means that Buckingham Palace would be sending out approximately 46,000 100th birthday telegrams a year in 2050 – more than eleven times the current total of about 4,000.

The UK population currently stands at just under 60m. The birth rate for England and Wales in 2003 (which has just been announced) was 1.73, up from 1.65 in 2002 - the greatest annual increase since 1979. Official projections assume that the UK birth rate will be 1.74, in which case the population would increase to about 65m by 2050 – a rise of under 10%.

The age profile of the UK will look very different to today’s, depending on the future birth rate and social needs will also vary dramatically, since there would for example need to be far fewer teachers and schools.

The current average age of people in the UK is 38. By 2050, based on the official assumptions that would increase the population to 65m, that average age would rise to 44. Under that scenario, 26% of us will be aged over 65, compared with just 16% today. At present 65 year old men may on average expect to live a further 16 years and women 19 years. These are forecasted to rise to 21 years and 24 years respectively.

This population change is set to have fundamental long-term economic and social implications. For example, currently for each person aged 65 or over there are 3.9 people aged from 15 to 64, on average. Assuming current trends continue, by 2050 that figure will fall to just 2.2.

David Lewis, who chaired the committee that produced the report, commented, “It is important to understand that future fertility rates will have a profound effect on the size and shape of the future population. We are presenting our findings in order to promote discussion.”

Clare Hobro, who co-authored the report, commented, “The Actuarial Profession believes that not nearly enough attention is currently being paid to this fundamental issue of the birth rate. Now is therefore a good time to review the current incentives and disincentives that government policy offers to families raising children.”