The rising cost of an ageing population may push some of the major industrialized countries into debt levels that would devalue their investment grade to the status of junk bonds, credit rating agency Standard & Poor's has warned.

The US, France, Germany, Italy and Japan are among countries that are in danger of seeing their fiscal rating cut to sub-investment grade if a drastic change in policy does not happen, the agency said. According to S&P’s calculations, rapidly ageing populations are putting national budgets under pressure.

The report calculated that the proportion of people aged over 65 compared to those of working age will rise from 11% in 2000 to 25% in 2050. Japan faces one of the gloomiest predictions, with the report forecasting that it will descend into a junk rating in just 14 years time, along with Hungary and the Czech Republic. The US is projected to be reduced to junk in 2040, without policy change, while the UK would deteriorate to this level in 2050.

However, the report added: In reality, it is highly unlikely that governments will allow debt and deficit burdens to spiral out of control. The example of Belgium in the past decade is instructive: once governments are confronted with unsustainably rising debt burdens they do react, however reluctantly, by tightening the fiscal stance.