The Fiscal Mirage: Europe's Ageing Population Costs

Europe's ageing population is influencing fiscal policies more manageably than previously thought, contrary to its global counterparts like the U.S. and China. The report by Brussels' think tank, Breugel, suggests that despite Europe's declining birth rates and increasing retirements, the associated costs will rise slightly, challenging gloomy outlooks.

Europe's ageing population has long been a focal point in global demographics, often cited as a significant fiscal challenge. However, a recent report from Brussels-based think tank Breugel suggests that the financial burden on European governments may be more manageable than feared.

Using data from the European Commission, Breugel analyzed ageing-related expenses across the EU, projecting only a modest increase of just over 1% of GDP over the next 45 years. This contrasts sharply with higher cost projections in the United States and China.

Despite the challenges posed by an ageing population, including decreasing birth rates and potential economic impacts, Europe's fiscal situation remains comparatively stable. The report underscores the necessity for gradual policy adjustments and innovation to sustain this balance.

(With inputs from agencies.)