EUROPE – Rating agency Standard & Poor’s has warned that spending related to ageing could hit the credit ratings of five developed countries – Italy, Germany, France, the UK and US.

But it said this was not a prediction but a ‘simulation’. “In reality, it is highly unlikely that governments will allow debt and deficit burdens to spiral out of control.”

"Without further adjustment either to the current fiscal stance or to social security and health care costs, the general government debt-to-GDP ratios of France, Germany, and the U.S. will surpass the 200% of GDP mark by the middle of the current century," said S&P credit analyst Moritz Kraemer.

"This will result in deficits that will be more akin to those currently associated with speculative-grade sovereigns."

The comments came as S&P has released a report called "In The Long Run, We Are All Debt: Ageing Societies And Sovereign Ratings".

The report is part of a wider review of social security, corporate pension plans and retirement savings to be published by S&P on March 30.

“Assuming no change in their current fiscal stance and policies governing age-related spending, sovereign ratings could begin to fall from their current levels early in the next decade,” S&P said.

“By the 2020s, the downward pressure on ratings would greatly accelerate, and by the late-2030s, all but Italy would drop below the investment grade divide.”

Ageing was just one force that could jeopardize long-term fiscal solvency.

Kraemer called for countries to “embark on a prudent fiscal stance as early as possible to be able to better absorb the surge of entitlements ahead”.

He added: "Although attempts to reform pensions and health care systems are welcome, their positive effects are diluted by the nonchalant attitude among governments with regard to fiscal consolidation here and now."

Earlier this month S&P warned that Germany’s credit rating could come under threat if it doesn’t face up to the pressures of population ageing.