CapX: Can Japan defuse its demographic time bomb?

In Japan, around 25 per cent of people are over the age of 65. That is set to rise to 40 per cent by 2060. Meanwhile, the number of babies born there is at its lowest since records began.

This isn’t just a problem for Japan. All around the developed world a so-called “demographic time bomb” is threatening future prosperity and advanced economies face some tough choices.

Reports from the Department for Work and Pensions released last week suggest that the retirement age will have to be raised, with those under the age of 45 having to work a year longer. Inevitably, as life expectancy continues to rise (something which should, of course, be celebrated) and birth rates drop, this will barely scratch the surface. Bolder action is needed.

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