People may be living longer throughout Europe but that is creating “massive unfairness”. That is one of the keynote messages to emerge from a major new book on ageing, launched in Brussels on Tuesday 10 June. According to its author ageing is beginning to “destroy social structures and threaten our political stability”. It also, says author Giles Merritt, raises “uncomfortable questions” about social justice and the “looming bankruptcy of pension funds” in the years ahead.
Timebomb: When Ageing Explodes
In Timebomb: When Ageing Explodes, Merritt sounds an important warning that unless they defuse “ageing’s explosive force”, Europe’s society’s will be “devastated by it” within two decades.
He asserts that:
- Millennials and Gen-Zers are condemned to pay much higher taxes to fund pensions and healthcare for older people but will receive far less when they retire.
- The longstanding ratio of four taxpayers supporting each pensioner has shrunk to less than 3:1, and by mid-century will be an “unsustainable” 1.7:1.
- The average European family size has reduced to 1.5 children per couple, so fewer young people are entering the taxable workforce: by 2060 it will have shrunk by a quarter.
- There will be 60 million more pensioners in Europe by 2050 which means older people can easily outvote younger taxpayers.
- Europe’s under-35s own less than 5% of all net wealth, whereas ‘Baby Boomers’ at the same age had 20%.
- Up to two-thirds of ‘Generation Rent’s’ income can be swallowed by housing costs. Mortgages are often unattainable, costing up to 15 times earnings, up from four times in 1980.
- Europeans’ healthcare costs will have doubled by mid-century, on average taking up more than a quarter of governments’ budgets.
- Squeezed tax revenues along with increased public spending are a recipe for serious trouble ahead. A review of taxes on property, companies, and financial transactions is needed to put an end to cross-border loopholes for tax dodgers.
Ageing of Europe’s population
Merritt says, “Europeans haven’t embraced new technologies as effectively as Asians and Americans and have shown a navel-gazing preoccupation with intra-European questions”. They have “neglected” the reforms needed to streamline Europe’s industrial base and to confront the consequences of ageing, he argues.
“These have been confusing years for Europe. In 1980 it accounted for almost a third of the global economy, but now just 15%. On the other hand, Europe was mostly a geographical description then; the EU numbered nine countries, whereas today it has three times as many, its own currency and an embryo political structure. The bloc is potentially a super-power.
“Europeans’ ability to overcome centuries of cultural separation and armed conflict is essential to their future prosperity, but the ageing of its population risks wrecking the drive for closer integration.”
Ageing, he believes, is a “largely invisible problem”. “To use a nautical metaphor,” he adds, “Europe’s ship of state may appear to be sailing serenely onwards, but it is holed below the waterline by its demography.” Britain is no less vulnerable for having left the EU, “perhaps more so,” says Merritt.
This book presents a Europe-wide picture of the problems that ageing is creating and also draws substantially on developments and research in the UK. Its overall message is that ageing is hitting almost all developed nations, and risks undoing much that the EU’s economic and political integration has achieved.
Demographic tsunami
Merritt sounds a note of optimism, saying:
“It’s not too late to address these problems because although we can’t divert the demographic tsunami rolling towards us, we can surf it rather than sink and drown.
“Ageing’s impact could be softened by an array of policy measures that would adapt our 20th-century structures to the exigencies of the 21st. The snag is that doing so would impose an immediately heavier tax burden to alleviate the crushing costs awaiting the taxpayers of tomorrow. The other option of borrowing to add to European countries’ teetering debt mountains would cynically aggravate the financial troubles we are imposing on today’s youth.
“When asked about the future, most young people see climate change as their toxic legacy. There’s no disputing that mankind is failing to tackle global warming with the necessary speed and determination, but that doesn’t lessen ageing’s threats. Both are massively disruptive forces.
“My modest hope is that this book will help to draw more attention to ageing’s consequences and will stimulate efforts to counter them.”
- Merritt, a journalist specializing in Europe’s policy challenges, has been based in Brussels since 1978 and writes a fortnightly ‘Frankly Speaking’ commentary for ‘Friends of Europe’, the think tank he founded. He is also a Senior Associate Fellow at Belgium’s Egmont Institute.
