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Germany could be facing a critical downturn over the next five decades because of its dramatically shrinking birth rate and dropping population, a new government report has said. The falling and aging population will result in the eventual disintegration of Germany's generous social welfare programmes, including old-age pensions, the report warns.

The Federal Statistics Office projected a drop in population from 82 million in 2008, the largest in the European Union, to between 65 million and 70 million. By 2060, 34 percent of the population will be older than 65 and 14 percent will be 80 or more, up from 20 percent and 5 percent respectively last year.

"While the number of older people increases, fewer and fewer people will be of an age at which they can work," Roderich Egeler, the head of the statistics office said in the report. "This will have consequences for the social security system".

Germany's 82 million citizens make it the most populated country in the EU, accounting for 16.4 per cent of the total European population. This is followed by France with 64 million, the United Kingdom with 61 million, and Italy with 60 million. None of these countries have a birth rate that allows for the population to remain steady and all rely upon immigration to maintain population and the work force.

The government's report followed a report from the Institute for Family Policies which said Germany had one of the most elderly populations of the 27 states of Europe and is facing an eventual demographic "catastrophe" and bankruptcy of its welfare programmes.

The Federal Statistics Office report said that the number of pensioners who will have to be supported by working-age people could almost double by 2060.