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Global population to shrink this century as birth rates fall

UN report shows earlier — and lower — peak for number of people in the world to reach its maximum level

The world is set to have 200mn fewer people than previously expected by 2100, according to a UN report that highlights the dramatic impact of falling birth rates on the global population.

The latest edition of the World Population Prospects, a report published by the UN every two years, said the number of people would grow from 8.2bn in 2024 to a maximum of around 10.3bn in 2080, before declining to around 10.2bn by the end of the century.

The 2022 edition of the same report estimated the global population would peak at 10.4bn by the 2080s and remain at that level until 2100. Previous editions had forecast uninterrupted growth into the 22nd century.

“The demographic landscape has evolved greatly,” said Li Junhua, under-secretary-general for economic and social affairs at the UN. “In some countries, the birth rate is now even lower than previously anticipated, and we are also seeing slightly faster declines in some high-fertility regions.”

Globally, women were having one child fewer, on average, than they did around 1990, the report said.

In more than half of all countries, the average number of live births per woman is already below 2.1, the level at which the population is stable. In nearly a fifth of all jurisdictions covered by the report — including China, Italy, South Korea and Spain — there were fewer than 1.4 live births per woman, a level described by the UN as “ultra low”.

Wolfgang Lutz, founding director of the Wittgenstein Centre for Demography and Global Human Capital in Vienna, said the drop-off in fertility rates was “likely to have to do with value changes in the younger generation, for whom having children evidently is less important as a key dimension of a successful life than it was for previous generations”.

The UN reported that in 63 jurisdictions, containing 28 per cent of the world’s population in 2024, including China, Germany and Japan, the size of the population peaked before 2024.

By 2100, Europe’s population is set to shrink by 21 per cent from its peak in 2020, marking the largest decline of any continent.

The fall in population could help mitigate climate change, by lessening demand for carbon-intensive activities, such as flying or the production of energy generated by burning fossil fuels. It can also play a role in reducing deforestation, which has often been carried out to clear the way for food production, housing and employment.

The average person contributes to 4.3 metric tons worth of CO₂ emissions, according to the World Bank, although this is not evenly distributed with people in western nations historically having a much larger carbon footprint.

Junhua said an earlier and lower peak in global population was “a hopeful sign” that pressures on the environment could be lessened.

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Some economists, such as David Miles, professor of financial economics at Imperial College Business School, have highlighted how a shrinking population diminishes pressures on housing, infrastructure and services. Others think countries could make more of their “longevity dividend”, capitalising on healthier older generations.

However, a shrinking working-age population and a higher proportion of older people will add pressure on public finances.

“The problem is that with fewer workers, you get less growth and less tax, and with more incapacitated old people, you need to provide more care, medicine and welfare,” said Charles Goodhart, professor at the London School of Economics.

“If medicine and medical science cannot deal with the diseases of the old, we will have a lot of incapacitated old people with fewer young people to look after them, and it will become very difficult,” said Goodhart.

The UN urged societies ageing at a fast pace to use technology to improve productivity, boost life-long learning and create opportunities to extend working lives.

Malaysia’s king bids to revive Chinese-backed ‘dream paradise’

Development of vast Forest City complex in Johor has languished as Country Garden’s debt problems mount

Malaysia’s billionaire king is trying to resuscitate a huge real estate project he helped launch in his homeland, with its Chinese developer Country Garden having succumbed to the property crisis in mainland China.

With plans for luxury condominium towers, hotels, a shopping mall and golf course, the $100bn Forest City development straddling artificial islands on Malaysia’s southern coast was billed as a “dream paradise” when the project was launched in 2014. It aimed to provide homes for as many as 700,000 people across 7,000 acres by 2035.

More than a decade later, the joint venture between China and Malaysia appeared to be more of a ghost city on a recent visit by the Financial Times, with largely empty apartments and quiet streets. In a stark example of the far-reaching effects of China’s economic downturn, the project’s debt-laden developer Country Garden has been unable to prioritise its largest overseas project. It is alleged that only 15 per cent of Forest City has been built in terms of land area.

However, Country Garden’s troubles have provided an opening for Malaysia to address the situation. Sultan Ibrahim Iskandar, who became king in January under the country’s five-year rotating monarchical system, has taken a more active role in the project’s direction in recent months, according to two people familiar with the development, although the shareholding structure has not changed.

Company records show Country Garden still owns 60 per cent of the project, while a private company, Esplanade Danga 88, of which the king owns 64 per cent, has the remaining 40 per cent. This puts the king’s overall stake at roughly 25 per cent.

Advisers to the business-friendly, motorcycle-riding monarch — who is also the ruler of the state of Johor, where the project is based — have engaged the federal and state governments this year on suggestions for repositioning Forest City.

Daing A Malek Bin Daing A Rahaman, a Malaysian businessman and member of the royal court of advisers to the king, is one of the people taking advice on the project’s direction, the two people said. Malek owns shares in Esplanade Danga 88 and is a director in Country Garden Pacificview, the master developer, filings show.

Country Garden Pacificview reported a loss after tax of RM342mn ($72mn) in 2022, but has not reported 2023 figures.

“Country Garden has bigger problems to deal with and has let the Malaysia side take charge, even though [the Chinese group] is still the biggest shareholder,” one of the two people said, adding that Malaysia had become frustrated with the “empty” development.

The national palace did not respond to a request for comment.

In the months following Country Garden’s debt default last October, Malaysia has sought to make the project more of a commercial district, with Forest City included in a proposed special economic zone between Johor and neighbouring Singapore. The king has given his strong public backing for the initiative set to be signed by the state and federal governments this year.

Plans have also been raised to move some government agency offices to the site by the end of the year, according to one official. Prime Minister Anwar Ibrahim last year announced that Forest City would be designated a special financial zone, with incentives including lower income tax rates.

The existing commercial and leisure parts of Forest City have generally also fared better. The golf course on a weekend in June was fully booked, and the adjoining hotel had a 70 per cent occupancy rate, thanks mostly to golfing enthusiasts from Singapore and South Korea and a Singaporean church group, according to staff on duty.

Forest City’s exact status in terms of sales is difficult to verify. Country Garden and the Malaysian state government, when cited in media reports, have made claims varying from the project being only 15 per cent built to 70 per cent of the units built thus far having been sold in the past two years.

An onsite showroom in Forest City displaying a model of the project has multiple “sold out” signs over replica apartment blocks. However, the air-conditioning was off and only two salespeople were on duty on a visit to the largely empty hall by the FT in June. The streets and a duty-free shopping mall were mostly devoid of people. The residents’ club room with an infinity pool in the landmark Carnelian Tower condominium was locked, with no lights on.

Country Garden was once seen as a stable player in China’s property market after peers such as Evergrande defaulted in 2021 and sparked a cash crunch. But the developer, which had $200bn in liabilities as of the end of 2022, defaulted on its offshore debt payments last October and this year has faced a winding-up petition in Hong Kong, currently adjourned until the end of July, as it attempts to restructure.

The main criticism levelled at Forest City by the Malaysian side is that Country Garden marketed the project squarely at Chinese buyers wanting a second home or an investment, rather than at residents of Malaysia or Singapore. But bad timing, with pandemic lockdowns and President Xi Jinping’s stricter controls on moving capital and travelling overseas, left swaths of the 28,000 built units empty. Many are available today for resale at lower prices or for rent on local real estate websites.

Country Garden’s Forest City project disputed in a statement that it was a “ghost town” and said there had been no recent change in the projects’ management rights. There was no specific deadline for the 700,000 total population target, it added, and of 10,000 current residents, more than half commute to Singapore.

One former Country Garden employee, who visited the Malaysian project in its early stages in 2016, said the “kick-off of the project was quite difficult”.

The person added that the company offered the promise of lucrative bonuses for salespeople but also required the prospective project managers to buy properties themselves in order to support initial sales volumes. He estimated there were hundreds of project managers for sales involved in Forest City.

“I know some people, they joined, put their stake there, got fast-tracked, became senior project managers,” he said. “Now it’s just stuck, I know many people regret it already.”

Investment bosses call for ‘radical’ Isa overhaul to boost UK equities

AJ Bell and Hargreaves Lansdown say too much choice is deterring people from using the savings products

The UK’s largest investment sites have urged the government to overhaul the British savings market in an attempt to channel money into domestic equities, which have suffered from record investor outflows.

AJ Bell told the Financial Times it had sent a policy paper to the Labour government asking it to consider “radical” simplification of the Individual Savings Account market, as well as tax breaks for UK stocks, to encourage retail investors to buy domestic equities.

Michael Summersgill, chief executive of AJ Bell, said in the paper that the government, which is responsible for setting the Isa rules, should allow for one Isa product instead of several different versions, which he said was deterring many adults from investing.

Summersgill said “too much choice can lead to people feeling overwhelmed”, according to behavioural research by AJ Bell, “resulting in low levels of engagement”.

Cash Isas allow people to save money without incurring income tax on interest, while stocks and shares Isas shelter investors from income tax on dividends and capital gains tax when selling shares. AJ Bell has proposed combining these, along with accounts for juniors and the Innovative Finance Isa.

“The UK capital markets face well-documented challenges, yet we have not created an environment that ensures we get the highest possible participation in our own capital markets from our own citizens,” he said.

Dan Olley, chief executive of Hargreaves Lansdown, the UK’s biggest consumer investment site, said it was “essential that we keep things as simple as possible”.

James Carter of Fidelity International said “complexity destroys confidence” and that “further simplification is needed.” Alastair Black, head of savings policy at Abrdn, said “the Isa brand has been stretched too far, with several competing Isa products acting as a barrier to entry.”

The comments come as domestic equity funds continue to lose billions of pounds to overseas shares. Individual investors withdrew a record £1.8bn from UK equity funds in May, according to the Investment Association, a trade body. Coutts said this year it was shifting some £2bn from UK stocks to international rivals.

The outflows are adding to pressure on the London Stock Exchange, which has suffered from a dearth of corporate flotations as companies seek a bigger pool of investors in the US.

Summersgill said “addressing [Isa] complexity seems to me to be the bare minimum any government serious about encouraging greater levels of long-term investing should aim for.”

The Labour party, which came into government this month, said at the start of the year in its plan for financial services that it would look to simplify Isas, but stopped short of providing any detail. Investment sites such as AJ Bell and Hargreaves, which offer individuals Isas and pensions, would benefit from an increase in customers and fund inflows.

However, Hargreaves Lansdown and AJ Bell said they did not support the former Conservative government’s plans for a “British Isa” to funnel money into UK stocks, warning that another product would make the market more complicated.

In AJ Bell’s policy paper, Summersgill said the overall Isa allowance should be increased from £20,000 to £25,000, as this would “naturally drive more money towards UK plc”.

Research by HM Revenue & Customs shows roughly 3mn people have more than £20,000 in a cash product and nothing in a stocks and shares equivalent, meaning savers could be earning more while supporting UK equities if they channelled some of this cash into shares.

Investment sites have also argued that dropping stamp duty — which is levied at 0.5 per cent for investments of more than £1,000 in most UK stocks — would help create another incentive to buy British shares.

Summersgill said an “even more radical” idea would be to extend inheritance tax exemption beyond investments in small companies listed on the alternative market to all UK shares and domestic equity funds.

“If Labour can grasp the nettle by radically simplifying Isas, it can establish a foundation upon which the future prosperity and ultimately UK businesses can be built,” Summersgill said.

The Treasury said: “There’s no time to waste to fix the foundations of the economy, which is why we’ve taken immediate action to boost investment and economic growth. We will also take action to reinvigorate our capital markets to support this.”

Private equity firms slash use of risky debt tactic to fund payouts

Use of fund-level net asset value loans to pay dividends falls 90% after institutional investors raise concerns

Private equity firms have sharply curtailed their use of a controversial debt financing manoeuvre to return cash to investors, after institutions raised concerns about how some groups have embraced new forms of leverage to compensate for a lack of deals.

So-called net asset value loans used to pay dividends fell by about 90 per cent during the second half of last year following heightened criticism from investors, according to 17 Capital, a New York based specialist lender that has pioneered the market.

Buyout firms have increasingly added an additional layer of leverage on top of their typical deal-linked borrowing, taking on debt secured against their fund investments, with some firms relying on those funds to pay dividends to investors.

NAV loans, which are collateralised by the individual investments in a fund and can equal as much as 20 per cent of the fund’s overall value, have enabled firms to extract cash from their portfolios without having to sell assets in difficult markets.

Firms including Vista Equity Partners, HG Capital and Carlyle Group used the loans to pay dividends in 2022 and early 2023 during a marketwide slowdown in dealmaking and IPO activity.

Debt-fuelled dividends from buyout firms hit a record high in 2023, with some groups even using fund-level borrowings to inject fresh capital into ailing companies.

But the approach has proved controversial with private equity investors, because the extra debts have added new risks to their portfolios by exposing an entire fund’s investments to the possibility that just a few of its deals sour.

Although private equity funds have long loaded debt on to portfolio companies to allow them to extract dividends, payouts to shareholders funded by NAV loans are considered riskier.

Whereas traditionally each deal in a private equity fund carries its own balance sheet to stop troubles with one investment spilling over to others, net asset value loans cross-collateralise the fund’s investments.

But 17 Capital said that just 3 per cent of the industry’s $16.4bn of NAV loans was used to fund dividends in 2023, down from a quarter of the $10bn borrowed in 2022.

Pierre-Antoine de Selancy, managing partner at 17 Capital, said firms had cut back after large institutional borrowers increased pressure on firms to limit or eliminate such borrowings to pay dividends and began requiring them to seek consent.

“The power of the limited partners is crazy,” said Selancy, referring to the investors in private equity funds. “They have the power today and they are using it,” he added.

Investors in private equity funds told the Financial Times they had grown increasingly suspicious of the NAV loan-funded dividends and had devoted additional resources to understand private equity firms’ motives.

Steven Meier, chief investment officer of the New York City Retirement System said he worried some had turned to the deals because they were “desperate to appease underlying investors clamouring for more distributions and exits” and worried the deals put “excessive” debt on portfolios.

The New York pension fund had approved NAV loans in rare instances, but only when an investment firm put forward an investment opportunity it viewed as “a compelling investment option in terms of valuation,” said Meier. The fund has also rejected loans because their costs were too high, he said.

Richard Sehayek, a managing director at private credit group Ares who leads their fund finance business, said firms were primarily borrowing against their funds to finance acquisitions or pump money into existing portfolio businesses in need of fresh capital. Firms had largely stopped using it for dividends, he said.

“The noise has died down and the types of trades that are supported by LPs are much more pre-baked and determined,” Sehayek said.

“It’s never really a no [from investors to private equity firms]. More likely, they may have an objection and it’s about the sponsor managing that.”

Housebuilders warn construction lag threatens Labour plan to ‘get Britain building’

Barratt says it will build fewer homes this year as it tries to catch up from effects of market slump

UK housebuilders have warned that it will take at least a year to start increasing housing supply, with output expected to fall this year, underlining the scale of the challenge facing the new Labour government in its mission to “get Britain building”.

Barratt, one of the country’s largest developers, warned last week that it would build fewer homes in the coming year, as it tries to catch up from a slowdown in land buying and new site openings triggered by a market slump.

That comment was echoed by MJ Gleeson, a smaller builder focused on the north of England, which told the Financial Times a market recovery was taking longer than expected, adding it was not expecting completions to pick up until the second half of next year.

The lag in output heaps pressure on the government’s target to build 1.5mn homes over the next five years to tackle a national housing crisis, a plan that is dependent on commercial housebuilders delivering more homes.

Aynsley Lammin, analyst at Investec, said hopes that the industry’s output might start to recover in 2024 have “definitely been pushed into 2025”, and that adding volumes would likely “be ramping up more meaningfully from the second quarter of 2025”. 

“It will . . . take time for the planning changes to work through the system and for the housebuilders to react to get more sites opened,” he added.

The extended timeline for a recovery in new construction follows an almost two-year lull that is expected to continue even as the housing market stabilises on the expectation that interest rates will start to fall.

As one of its first announcements after sweeping to power, Sir Keir Starmer’s administration announced measures to unclog Britain’s deadlocked planning system in order to boost housebuilding to more than 300,000 homes a year — a target that has not been met for almost half a century. 

However, the government will face an uphill struggle to meet that target, with Savills projecting that completions will fall this year. Newly built homes sold by large developers account for by far the largest component of new supply, with Savills predicting that new homes for private sale will drop to about 100,000 in the 12 months to March 2025, from an estimated 115,000 a year earlier — compared with an annual average of 140,000 in the three years to March 2023. Official figures will be released in November.

Barratt expects to deliver between 13,000 and 13,500 homes by the end of June next year, down from 14,004 the previous year. It blamed the fall on “temporary” delays in opening new sites after buying less land in the past two years amid a slump in demand from buyers.

Most big developers halted land buying and slashed their output immediately after the disastrous mini-budget in the autumn of 2022, which pushed up mortgage rates and crashed the home sales market. 

“We can turn the tap off pretty quickly. We can’t turn the tap on very quickly,” said Graham Prothero, chief executive of MJ Gleeson. 

He said that the sales market had been “more challenging . . . than I think most of us expected” but that “from our perspective, it is less down to markets and more down to the sheer practicality of getting sites open”. 

Although speeding up planning approvals will help developers, Greg Fitzgerald, chief executive of FTSE 100 housebuilder Vistry, said the key factor in how much the industry will build is sales.

“All housebuilders can build quicker than they currently are,” he said. “But they are only currently building to the level they can sell.”

Rebuilding the skilled workforce necessary to deliver many more homes could also prove a brake on the recovery as it gathers pace.

“As of today, I don’t have a problem,” said Prothero. “If over the next 12 and 24 months, with the commitment of the new government, people look to ramp up volumes considerably, then [labour force] could very rapidly become an issue.”

Bela Bajaria, Netflix’s chief content officer: ‘If you try to make a show for everyone, you make a show for no one’

She presides over a $17bn budget and is looking for local hits with global potential

Bela Bajaria, Netflix’s chief hitmaker, rolls her eyes when I suggest that she should have ordered the cheeseburger for the sake of our conversation. A cheeseburger — or at least a gourmet version — was a colleague’s description she once endorsed as the ideal Netflix output: tasty to most, not cheap but not too exclusive. And she sticks to the description, despite a slight grimace.

“That’s a great goal, to make something both premium and very commercial,” she tells the FT over some equally pricey fries in London. “We’ve done it over and over again. They’re not mutually exclusive.”

As chief content officer since 2023 for the streamer, which has almost 270mn subscribers, Bajaria can claim to have more of a say in what people watch every day than most in Hollywood, working with Netflix’s creative teams around the world on commissioning the next blockbuster movies or binge-worthy series.

Bajaria has her own origin story worthy of a Netflix pilot (the sort labelled Heartfelt — Witty — Inspiring). Born in the UK to Indian parents in 1970, and living for a time above a corner shop run by her family in Highgate, north London, she moved to the US as a child. Family TV-time watching glossy soaps Dallas and Dynasty helped instil her love of the commercially successful, moreish shows that have become her calling card.

TV also offered a chance to fit in. “I would go home every day and watch films and TV because I wanted to quickly get rid of my accent. I wanted to learn American culture.”

She worked in her parents’ car washes, learning the strong work ethic that helped her push through the ranks as an outsider in Hollywood, where older, whiter and male voices held court. She picked up a Miss India Universe title after college, got her break at the lowest rungs of the TV world as an assistant in the movies and mini-series department at CBS in 1996, but quickly was picked as an executive and became a fixture in Hollywood’s “most influential” lists. Including stints at network broadcasters CBS and NBCUniversal, she has marshalled shows such as Brooklyn Nine-Nine, Unbreakable Kimmy Schmidt and Master of None. And her LA accent has long lost any vestige of her north London start.

Bajaria’s background has served her well given the globetrotting nature of her role: more than two-thirds of Netflix’s audience is outside the US, meaning that local-language content is more important now than a “one size fits all” approach. Bajaria points to recent successes such as Squid Game from Korea, Heeramandi from India and The Gentlemen from the UK — programmes made with a domestic audience in mind that became worldwide hits.

But there is “no rule book” about what works globally and she believes that shows first need to work well locally: “Television, film starts with being very culturally specific and very authentic. If you try to make a show for everyone, you make a show for no one.” The semi-autobiographical dark UK production Baby Reindeer was an especially unexpected success, for example. Low-budget and with an unusual tone and topic, the controversial TV show about a man and his stalker briefly made it into Netflix’s top 10 most watched shows in English ever.

Bajaria joined Netflix to oversee unscripted programming (such as makeover show Queer Eye) in 2016 and took over as global head of television in 2020. Netflix quickly faced one of its largest crises after an unexpected drop in subscribers in 2022 blamed on password-sharing, sparking an almost $60bn plunge in its stock market value and analyst talk about the end of streaming. Suddenly, executives had a new mantra of profitability and a focus on programmes that could attract advertisers to new, lower-priced tiers.

Netflix has a content budget of $17bn this year (the same as 2023), making it one of the largest producers of TV and film in the world. This budget has never shrunk, although even the lack of growth is a marked contrast to the years of expansion. She says that expensive does not necessarily mean good, though, with smaller or cheaper shows able to resonate with audiences.

Bajaria says “people have different tastes” and Netflix needs to meet them all — from unscripted dating and reality TV shows to big-budget films and more esoteric series. Repetitive content would mean a lack of authenticity and ultimately fewer viewers, she says: “We’re not going to get scared and not do something because it didn’t work before.” She points to one recent live-action anime adaptation — Cowboy Bebop — that did not prove a success. But this did not stop her commissioning the similar One Piece, which went on to find greater audiences.

“We have to make film and TV that members love, and if they love it, the more they watch, the more they stick with Netflix, the more they recommend to their friends. I don’t want to be reactive . . . ‘If this thing works let’s do that again’ . . . you can’t do that.”

Even so, she admits that one of the metrics on which she will be judged — and in turn will be judging shows — is the cost of production against size of audience. “Ultimately, streaming is about engagement.”

Part of her budget is now being spent on streaming live sports and events. Netflix has struck a deal to broadcast two NFL American football games at Christmas, has shown boxing matches and will show WWE wrestling next year. Bajaria is also excited about “bringing these to life”: Drive to Survive, a programme that follows the Formula One teams, played a major part in boosting the races’ popularity in the US.

Despite these “appointment to view” live events on Netflix and shows with weekly episodes on rival streamers such as Disney, Bajaria says Netflix will continue to be an on-demand service that allows people to watch as much as they want when they want. “We don’t have only five shows that we need to spread out throughout the year.”

The next year has a number of binge-worthy series, she says. Netflix has a deal with the Duke and Duchess of Sussex that has scripted and nonfiction programmes in development. The Leopard, a series based on the novel by Giuseppe Tomasi di Lampedusa, is being produced in Italy. Another literary adaptation, One Hundred Years of Solitude from Colombia based on Gabriel Garciá Márquez’s novel, she describes as “stunning”. Senna — a drama based on the racing driver’s life — is coming from Brazil, while Frankenstein is being produced by Guillermo del Toro and a TV version of Richard Osman’s Thursday Murder Club feels like a guaranteed hit. 

She is excited about shows being developed by directors Kathryn Bigelow, Greta Gerwig and Noah Baumbach. But Bajaria says that Netflix should be equally proud of its unscripted output such as reality TV and dating shows. “We want to super-serve all of that. It’s a creative industry. It takes 150 people and some alchemy and a little fairy dust and lots of things to make something great.”