Relegation ahead

摘要

A high credit rating is a badge of honour for the treasuries of developed economies. Five of the G7 countries are ranked AAA, the highest possible, on their long-term debt. But ageing populations could wreak havoc on these exalted ratings if governments do nothing. By the early 2040s, all of them could be relegated into the BBB league-a ranking now bestowed on countries like Mexico-or even lower. This is the conclusion of a new report by Standard & Poor's, a credit-rating agency, on the damage that demographic change could do to public finances around the world by pushing up expenditure on pensions and health care. Crunching the numbers for 25 advanced countries, S&P finds that such spending will rise on average by seven percentage points of GDP by 2050. Despite a reduction in bills for education and child support, total age-related spending will rise by 6.1 percentage points.