I recently read the book Time Bomb: When Ageing Explodes by Giles Merritt, which lays out why demography is one of Europe’s most underestimated economic threats.

The argument is unsettling: ageing is already reshaping economies, politics and social contracts, and its effects will intensify.

At the core of the challenge is a shrinking workforce. Merritt highlights how Europe’s post-war prosperity rested on a favourable worker-retiree balance, with five workers to each pensioner. Today, it is below 3:1 in much of Europe and heading towards 1.7:1 by mid-century – meaning lower output, consumption and tax revenues, precisely as spending on pensions, healthcare and social care surges. By 2050, Europe is expected to lose 50 million workers while gaining up to 60 million pensioners.

Ageing is also a brake on growth. Productivity is often presented as the solution, yet Merritt underlines how Europe’s productivity growth has flatlined for more than a decade. Even automation and AI are unlikely to offset the economic drag created by fewer workers and consumers. Official projections point to a prolonged period of low growth, making it difficult to sustain welfare states alongside high public debt.

The danger is inertia. Ageing is inevitable; economic and social decline is not

One striking theme is intergenerational imbalance. Older Europeans are more likely to vote, own property and hold assets, while the young face higher housing costs, insecure employment and lower living standards. Under-50s risk becoming a political minority as electorates age, limiting their influence over tax, housing and education policy. This threatens to lock in policies that protect existing benefits rather than invest in productivity.