Danes again this year are producing fewer babies than it takes to replace themselves, continuing a trend that is worrying demographers, who fear that declining population growth will undermine the welfare system.

Last year, some 4,400 fewer children were born in than in 2010. In the first quarter of 2012, the number again declined, putting this year on track to having lowest birth rate since 1988.

“Our fertility rate is well under the replacement rate,” Hans Oluf Hansen, of the University of Copenhagen, told Kristeligt Dagblad newspwper. “In the long run, there will be fewer young people to provide for the elderly.”

In order for the population to remain at a constant level, the fertility rate must be slightly above two children per woman, but last year, the fertility rate was 1.76, a steep decline – in demographic terms – from the 2010 rate of 1.88 children per woman.

At the same time as the number new Danes coming into the world is going down, so too is the number of Danes leaving it. While that means the overall population is increasing – even before the approximately 25,000 people who immigrate here each year is factored in – it means there will be fewer taxpayers to shoulder the burden of tomorrow’s pensioners and other benefit recpients.

The explanation for the continued decline in birth rates, according to experts, is that fewer families are having the third and fourth children that help compensate for those who only have one or no children. The reason, they say, is obvious: the economy.

“The recession has hit young families especially hard,” Mogens Nygaard Christoffersen, of welfare research institute SFI, told Kristeligt Dagblad. “There are a lot of things that need to come together – education, job, place to live. And people feel a responsibility for the children they bring into this world.”

But even with the poor economy, Denmark's birth rate still lags behind the other Scandinavian countries. In Sweden, for example, it is 1.9 children per woman.

Changing that, say experts, requires evening out the uncertainty of economic peaks and troughs. And while the recent tax reform and changes to the quarterly universal child payment have been criticised by some demographers as a move that will contribute to further declines in birth rates since it takes money out families’ pockets, Hansen said indirect payments such as tax credits would have a bigger effect.

“Our experience shows that you can’t legislate a higher birth rate. No-one can make their living off of producing children.”