The demographic timebomb
The rising ratio of middle-aged savers to young spenders spells trouble for markets.

Many forecasters rightly pointed out at the beginning of the financial crisis that the recovery would be very slow by historical standards as it would take years to work off the huge debt accumulated during the bubble.
Another future headwind for the world economy one that will outlast the hangover from the credit crunch is that populations are ageing.
This implies not only fewer workers producing less national income, but also heralds an era of increased volatility, says Andy Mukherjee on Breakingviews. The ratio of middle-aged people 45- to 54-year-olds to those in their 20s is rising worldwide, from 0.65 in 2010 to 0.85 in 2025.
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The middle-aged save more, so as the ratio goes up, the economy's ability to withstand deflationary shocks dwindles; more and more people will be saving rather than spending.
Moreover, young people's spending normally spurs investment, soaking up the savings of the middle-aged. But as the young group shrinks, its spending potential becomes too small to encourage much investment.
So, savings chase a limited set of investment opportunities, implying more asset bubbles in future. Markets "are in for a rocky ride over the next two decades".
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Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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