A lot of people are really underestimating how massive the changes are in the demographic outlook for pretty much every country in the world.

Populations across the world will take years to recover from a pandemic baby bust as delayed weddings, job worries and multiple COVID waves put couples off starting families, analysts have warned.

A V-shaped recovery from the plunge in global births is “highly unlikely” as the pandemic exacerbates demographic time bombs that threaten to cripple economies, according to Morgan Stanley.

Its analysts pointed to slow rebounds in births in the aftermath of the Spanish flu and previous economic crises as a warning sign for policy-makers.

Economists have predicted that aging populations and shrinking workforces will have huge impact on developed economies and public finances in the coming decades.

“We believe that optimism in rebounding birthrates or a `catch-up' is misplaced,” said Edward Stanley, Morgan Stanley analyst. “Prior financial crises suggest the suppressant on birthrates can last for three to four years. Moreover, using the 1917-20 Spanish flu example as a loose proxy, the recovery in the birthrate in 2021 is unlikely to be linear. In 1917-20, with each new wave of virus came a renewed downturn in subsequent births.”

Population experts believe the pandemic caused the fertility rate in the U.K. to plunge to a record low of 1.6 children per woman in 2020 amid unprecedented uncertainty for families. (A rate of 2.1 is required for a population to replace itself.) Decades of falling births have left governments facing rapidly aging populations but the legacy of COVID threatens to deepen the impact.

The Wall Street bank predicted that 70 per cent of the world's population will be below the replacement rate within five years. It highlighted the quicker-than-forecast slump in the U.K. birthrate in recent years as a sign that global demographic pressures are building far faster than first feared.

HSBC has warned that the U.K.'s working age population could be falling by the end of the decade, threatening to stunt GDP growth and ramp up the pressure on already stretched public finances. Governments will be squeezed by fewer workers paying tax and higher costs for health care and state pensions.

HSBC economist James Pomeroy said it was “a massive fiscal problem when you're taking on a lot of debt.”

He added: “A lot of people are really underestimating how massive the changes are in the demographic outlook for pretty much every country in the world.”

The Scottish government has already taken action to stave off the impact of an aging population. It unveiled its first population strategy earlier this year, drawing up plans to provide wider access to fertility treatment and incentives for families to settle in Scotland.