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Older man and woman working out on exercise machines © EC

2009 ageing report: Europe tackling the challenge of an ageing population but the recession threatens a setback.

In recent months EU countries have injected billions of euros into their economies to stabilise the financial system and stoke growth. Governments agree the spending is necessary to fight the worst slump in decades, but it has driven up deficits just as some countries were starting to get out of the red – crucial for coping with the implications of an older population.

Dealing with the ageing problem during the recession won’t be easy, says Joaquín Almunia, EU commissioner for economic affairs. But he believes it can be done through well-designed policies geared towards more efficient social spending, increased productivity, better education and higher employment levels.

Above all, EU governments must reduce budget deficits once the economy rebounds, the commission says in a paper on the ageing report.

In 50 years’ time, the population will be much older but only slightly larger. The median age, currently around 40, is expected to rise to about 48 because people are living longer, birth rates are low and migration is slowing down. This will mean smaller revenues from a shrinking working-age population and higher costs for pensions, healthcare and long-term care for the elderly.

The strain on public finances will be significant if the EU continues on its current course. According to the report, spending will rise by an average of 4.7% of GDP by 2060 because of the growing number of older people. By then, there will be just two people of working age (15-64) for every person over 65, instead of the current four.

This is just the EU average. Population trends vary widely across the EU, with some countries facing much greater increases in age-related spending, especially on pensions. The next years – the last before baby boomers begin to retire in large numbers – will be crucial. “There is still a window of opportunity,” the report says.

But more reforms of pensions and other elderly support systems are needed, as well as efforts to keep older people working longer; the report notes that only about 50% of people are still employed at the age of 60.

2009 ageing report

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