A shortage of babies risks causing long-term economic stagnation for Britain, a British political public policy think-tank warned Monday in a report.

Falling fertility rates will deepen the country's "baby bust" with a long-term trend toward people having fewer children, said the London-based Social Market Foundation (SMF), adding that it could leave Britain with fewer workers, a weaker economy and unsustainable public finances.

In 2020, the number of children per woman, also known as the total fertility rate (TFR), stood at 1.58 in England and Wales, almost half the post-WWII peak of 2.93.

Since the early 1970s, the TFR has been below the critical replacement rate of 2.1 children. The SMF said depending on the scale of immigration and trends in life expectancy, Britain could see its population shrinking in the 21st century.

Aveek Bhattacharya, the chief economist at the SMF, said: "The question of whether the government should intervene to try and increase the birth rate is clearly a sensitive topic that must be delicately handled. 

However, given the alarming fall in fertility rates, and the risks that population ageing poses to our social and economic wellbeing, it is a discussion we should not duck."

The report suggested that effective interventions could include payments to parents, greater parental leave entitlement and cheaper childcare, warning such policies could be very costly and only deliver modest increases in the birth-rate.