Money & Macro Talks The coming demographics earthquake ft. prof Charles Goodhart
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Feb 11, 2026 Charles Goodhart, economist and LSE Emeritus Professor known for work on monetary policy and demographics. He defines the great demographic reversal: aging populations and falling fertility. He explores fiscal strain from fewer workers, risks to asset prices and inflation, AI as a partial offset, migration limits, and why political resistance makes reform hard.
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Labor Scarcity Could Raise Inflation
- Labor scarcity plus higher taxes on labor will push workers to demand higher wages.
- That combination, absent offsetting productivity gains from AI, risks higher inflation and nominal interest rates.
AI Is An Uncertain Offset
- AI may raise productivity and reduce demand for skilled labor, partially offsetting labor shortages.
- But the magnitude is unknown and cannot be relied upon as the primary fix.
Policy Steps To Ease Fiscal Strain
- Raise retirement ages and cut pension levels to stabilize public finances where feasible.
- Favor taxes that don't harm growth, like land and property taxes, over higher income taxes.
