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Fiscal Sustainability: Conclusions on Challenges Arising from an Ageing Population



The Council on 18 June 2021, approved conclusions on the fiscal sustainability challenges arising from an ageing population. The conclusions draw on the main findings of the 2021 ageing report and call on member states to address the economic and budgetary consequences of ageing.


The conclusions stress that ageing populations pose a significant challenge for the long-term sustainability of public finances. The Council notes that government debt levels have risen due to the COVID-19 crisis and that they are expected to stay high for some time. At the same time, it underlines that premature withdrawal of fiscal support should be avoided to preserve longer-term fiscal sustainability.


The Council takes note of the 2021 ageing report, which highlights the decline in the working-age population. According to the report, by 2070 there will be less than two working-age persons for every person aged over 65, while currently there are three. That means that, in the long term, GDP will only be able to grow based on labour productivity.


According to Eurostat, the proportion of people of working age in the EU-27 is shrinking while the relative number of those retired is expanding. The share of older persons in the total population will increase significantly in the coming decades. This will, in turn, lead to an increased burden on those of working age to provide for the social expenditure required by the ageing population for a range of related services. ECOPNET (European Cooperation and Partnership Network) comments that the impact of demographic ageing within the European Union (EU) is likely to be of major significance in the coming decades.

The report projects an increase in age-related public expenditure (pensions, healthcare and long-term care), with numbers varying depending on productivity growth, demographic developments and the macroeconomic situation.


In this context, the Council calls on member states to address age-related spending by raising employment rates and productivity, tackling the gender gap in the labour market, and adapting pension, healthcare and long-term care systems.


It also welcomes the positive impact the national pension system reforms carried out in most countries have had on public expenditure and reaffirms the importance of taking advantage of the reform and investment opportunities offered by the Recovery and Resilience Facility and the other components of Next Generation EU.




Source: Council of the EU Press Releases

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