The United Kingdom is facing a fertility crisis that has far-reaching implications for its society and economy. According to CapX, since 1979, women’s intended fertility in the UK has remained relatively stable at around 2.2 children per woman. Yet, the reality tells a different story: in 2023, the total fertility rate in the UK hit a record low of just 1.44 children per woman. This marks a widening gap between the number of children women say they want and the number they actually have, raising urgent questions about the future of the country’s workforce, innovation, and the sustainability of its welfare system.
This demographic shift is not merely a statistical curiosity. With fewer children being born, there are inevitably fewer workers and taxpayers to support an ageing population. The consequences are stark: as the welfare state grows in size and cost, the reliance on intergenerational economic redistribution becomes increasingly unsustainable. The crux of the issue, as CapX points out, is existential—falling below the population replacement rate threatens the very fabric of the nation’s future.
But why is this happening? If people say they want more children, what’s stopping them? Clara Piano, in a new discussion paper for the Institute of Economic Affairs, suggests that government policy may be part of the problem. When politicians panic over declining birth rates, their instinct is often to reach for financial incentives: baby bonuses, childcare subsidies, tax credits, and sometimes direct cash handouts. However, these interventions are expensive and, more often than not, have limited impact on actual fertility rates. France, for instance, spends nearly 3.5% of its GDP on family benefits, yet its birth rate is only modestly higher than Britain’s.
Instead, Piano’s research highlights a different pattern: economic freedom is closely associated with smaller fertility gaps. Where families have more freedom to make their own choices—free from restrictive regulations and high costs—they are more likely to achieve their desired family size. In the UK, however, high housing and childcare costs present formidable barriers to family formation. Britain’s notoriously stringent planning system has made homes smaller, scarcer, and far more expensive, driving up the average age of both first-time buyers and first-time parents.
According to a 2017 study cited by CapX, there is a significant negative relationship between land use restrictions and fertility rates across all measures and geographies in the United States. The lesson for Britain is clear: restrictive housing rules are directly correlated with lower fertility. Families need space—both literal and economic—to grow. The more difficult it is to find affordable housing, the harder it becomes for young couples to start families.
Rigid labor markets further compound the problem. Financial readiness and flexible work schedules are the second and third most important factors for men and women considering when to start a family. In countries with dysfunctional labor markets—often the result of stringent employment regulations—it is much harder for young people to reach a point where starting a family feels feasible. Occupational licensing, minimum wage laws, and restrictions on hiring and firing disproportionately affect younger, less experienced workers, reducing their options and delaying family formation.
The UK’s current labor market woes are significant. Nearly one in four working-age people are out of work, and thousands of young people are signed off on long-term sickness benefits. The increase in employer’s National Insurance Contributions in 2025 has made employing someone more expensive and contributed to a decline in job vacancies. On top of that, the proposed Employment Rights Bill could make hiring younger and less-experienced people even riskier for employers, potentially pushing fertility rates down further.
Piano’s research in the United States shows that states with greater economic freedom have smaller fertility gaps. Where labor markets are dynamic and young people have the freedom to make their own choices, they are more likely to achieve their family goals. The fertility crisis, then, is a symptom of deeper economic malaise—a world where young people feel too financially constrained and overregulated to start families. As CapX succinctly puts it, “Government spending can’t buy more babies. But economic freedom can remove the barriers that stop people from having them.”
Against this backdrop, the debate over fertility policy is not unique to the UK. In the United States, the White House recently announced a series of policies aimed at expanding access to in-vitro fertilization (IVF), as reported by HR Brew. On October 16, 2025, the administration revealed that EMD Serono, a leading fertility medication manufacturer, would offer certain drugs at a reduced cost exclusively through TrumpRx. The Department of Labor issued guidance allowing employers to offer fertility services as standalone benefits, similar to dental or vision insurance.
However, these policies fall short of mandating employer coverage of IVF or providing direct financial incentives. Instead, they clarify that employers can choose to offer fertility treatments as “excepted benefits”—a type of benefit not subject to certain requirements under laws like the Affordable Care Act. While this move was framed as a “new benefit option,” experts like Katie Keith of Georgetown Law’s Center for Health Policy and the Law argue that it is more of an affirmation of what was already possible than a true policy innovation.
Nearly 47% of large employers in the US already cover IVF services in their largest medical plans, according to Mercer’s most recent survey. Many employers prefer to incorporate IVF into their group health plans because fertility treatments involve a range of care—from prescription drugs to lab testing to pregnancy support—that is best managed as part of a comprehensive package.
Still, fertility benefit providers like Carrot and Maven Clinic see the White House’s actions as an important moment for workplace fertility benefits. Carrot, for example, launched a “flex program” allowing employers to purchase its pharmaceutical benefit as a standalone option. Neel Shah, chief medical officer at Maven Clinic, noted that the administration’s efforts to lower the cost of fertility medications—which make up about one-third of the total cost of IVF—could be significant. Yet, as Politico points out, the deal to lower drug prices does not address other major expenses, such as lab visits and embryo storage. A full IVF cycle can cost between $15,000 and $20,000, making affordability a persistent barrier.
Ultimately, both the UK and the US are grappling with the same dilemma: how to support people in achieving their family goals in an era of economic uncertainty and rising costs. In the UK, the solution may lie in liberalizing planning rules, deregulating childcare, and making work more flexible—measures that could help young people feel more confident about starting families. Across the Atlantic, efforts to expand access to fertility treatments are a step forward, but without broader reforms, they may not be enough to reverse declining birth rates.
The challenge is clear: if societies want more children, they must create environments where families feel they have the freedom and means to grow. Anything less risks leaving the next generation smaller, older, and less able to sustain the future.
