Good news: Britain to become more over-crowded A chart, courtesy of James Knightley at ING... The ONS recently told us that more babies were being born in the UK than at any time since 1972; in the 12 months to end-June last year some 813,200 children were born, while 558,800 people died, leaving net births at 254,400. Meanwhile, 517,800 migrants entered Britain and 352,100 people left, leaving net inward migration at 165,600. All told, the UK's population grew 0.7 per cent to 63.7m last year. Knightley points out the reinforcing trend here: British born women are giving birth to 1.89 children on average while foreign born women are giving birth to 2.28 children. We're in a fresh baby boom, of sorts. The best guess from the ONS says the UK's population will have topped 73m by 2035, before rising to 80m in 50 years" time. So why's this "good news"? There'll be more workers to service our pensioners and pay off our debt, obviously. Knightley has just upgraded his forecasts for UK GDP, predicting growth of 2.4 per cent next year and 2.5 per cent in 2015, outpacing all it's European peers and setting a clear trend: Looking further ahead we suspect that the UK is likely to continue to outperform the rest of Europe, as demographics become more and more important in terms of determining whether individual countries can continue to grow while also dealing with elevated debt levels and the social and economic costs of rapidly ageing populations. This is becoming of vital importance given that we are now seeing the "baby boomers" - the vast wave of people who were born following the mass demobilisation of servicemen after the end of the Second World War - retiring. In fact, the number of people reaching the official retirement age of 65 jumped 30% in the UK between 2011 and 2012 to just under 730,000 with around 3.3 million people set to become pensioners in the next five years. This will of course mean more government expenditure on pensions; taking into account mortality rates the net number of pensioners rises by around 220,000 per year and with annual individual pensions of around £5700, then pension spending would be rising roughly £1.2bn per year before inflation uplift. Naturally, with older age comes greater health challenges with the probability of serious illness rising sharply. More elderly people therefore suggests government healthcare costs will rise significantly with care-home expenditure set to rise sharply. Additionally, with people living longer governments will be paying pension and healthcare costs for each person for longer. Consequently, the costs to the Exchequer are going to be sizeable and last for many decades - it is not unreasonable to suggest that someone retiring this year could easily have a third of their life still to live. The UK is obviously not alone in facing this demographic shift, but the UK appears to be in better shape to cope with these costs over coming decades relative to the rest of Europe. This is thanks to the fact it is producing more children than any other European Union country and has significant inward migration. A rising younger cohort of people means a broader tax base to pay for pensions and healthcare in the decades ahead. More on this, including a comparison with Germany, in the usual place. Related link: Baby boom drives UK population growth - FT Peak-population investing - FT Alphaville