Charting Europe’s demographic time bomb

Making the most of it.
Making the most of it.
Image: Reuters/Konstantin Chernichkin
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Fewer, older, greyer. This is Europe’s future.

The EU’s immediate economic problems are legion, but looming large is a long-term demographic crunch that makes today’s setbacks look tame by comparison.

Although the EU’s population will continue to grow—weakly—it will peak around 2050 before switching into reverse, forecasts the European Commission. In some big countries like Germany, Spain, and Poland, the shrinking has already begun.

All the while, Europe’s population is aging rapidly:

Image for article titled Charting Europe’s demographic time bomb

This is shown starkly by the age dependency ratio. Today, there are around four working-age people for every pensioner aged 65 or older, but by 2060, there will be only two workers to support every senior:

Image for article titled Charting Europe’s demographic time bomb

This is yet more bad news for the continent’s public finances. It essentially means two things: Higher costs and lower tax revenues. The commission forecasts it will require extra spending on pensions, health care, and other age-related categories worth 1.4% of GDP by 2060. A nifty new interactive tool that visualizes the impact by country shows that Germany will be one of the hardest hit, facing an extra bill worth 5% of GDP thanks to its aging population.

That may not sound like a lot in the grand scheme of things, but for a region where any sort of growth is hard to come by, it is an unwelcome economic drag that shows no sign of letting up for a very, very long time.