Europe's Ticking Demographic Time Bomb

Europe’s population is shrinking and aging so much so fast that a major decline in European living standards is now statistically inevitable within the next 15 years, according to data contained in a publication titled “The EU in the World: A Statistical Portrait.” The 113-page report — published by the European Union’s official statistics agency known as Eurostat — shows that Europeans increasingly are relegating themselves to the global margins, as their relative share of global wealth and trade shrinks. The main culprit is the refusal by Europeans to produce more children.

Eurostat estimates that the world’s population reached 6.9 billion people at the beginning of 2010. Asia accounts for more than 60 percent of the total (China, 20 percent and India, 18 percent). By contrast, the European Union’s 500 million people account for 7 percent of the world’s total population, and the United States with its 320 million inhabitants currently makes up 5 percent of the world total.

But the Eurostat data also show that while the world’s population increased by more than 130 percent since 1960, Europe’s population increased by only 25 percent during that same period, and will peak in 2025 before embarking on a permanent downward trajectory. By comparison, the U.S. population increased by 70 percent over the past 50 years and is expected to continue growing at a healthy pace well beyond 2050.

The report also shows that most of Europe’s population growth over the past decade has been due to mass immigration from mostly Muslim countries, and not to natural population growth by native Europeans. The data show that Europe’s population growth due to net immigration (the difference between immigration and emigration from an area) was more than twice the rate of natural population growth.

By contrast, Eurostat data show that America’s total population growth over the past decade has been more than four times greater than the rate experienced by Europe, and natural population growth has consistently been more than six times higher than the European rate.

At the same time, the Eurostat data show that Europe’s population is aging at a rapid rate. This will increase the old-age dependency ratio to unsustainable levels in the near-term future. The old-age dependency ratio shows the level of financial support for the retired population (aged 65 years and over) provided by the working age population (those aged between 15 to 64 years).

More specifically, the Eurostat data show that the European Union had a 26.1 percent old-age dependency ratio (population aged 65 years and over as a percentage of the population aged 15-64) in 2010, a figure that is forecast to jump to 31.5 percent in 2020, 38.7 percent in 2030, 46.1 percent in 2040, and a whopping 50.6 percent in 2050. According to Eurostat: “The EU-27’s old-age population will increase to such an extent that there will be fewer than two persons of working age for each person aged 65 or more by the year 2050.”

By way of comparison, the United States had an old-age dependency ratio of only 19.4 percent in 2010, a figure that is forecast to rise to 24.9 percent in 2020, 31.7 percent in 2030, 34.0 percent in 2040, and 35.1 percent in 2050, well below every single EU country.

Consider Germany, which currently ranks as the most populous country in Europe and the fourth-biggest economy in the world (China recently leapfrogged Germany to become the world’s third-largest economy). According to projections by the German Federal Statistics Office, the German population is forecast to shrink by as much as 20 percent by 2060.

Germany’s population of 82 million in 2008, the largest in the European Union, will decline to between 65 million and 70 million over the next five decades. By 2060, 34 percent of the population will be older than 65 and 14 percent will be 80 or more, up from 20 percent and 5 percent, respectively, in 2008.

The number of pensioners that will have to be supported by working-age people could almost double by 2060, the report says. While 100 people of working age between 20 and 65 had to provide the pensions for 34 retired people last year, they will have to generate income for between 63 and 67 pensioners in 2060, it says.

The German statistics office’s projection assumes a birth rate of 1.4 children per woman through 2020, an increase in life expectancy to 85 years for men and 89.2 years for women by 2060, and net immigration of 100,000 people per year.

“While the number of older people increases, fewer and fewer people will be of an age at which they can work. This will have consequences for the social security system,” the report says.

“Germany will clearly decline as an economic power, especially in comparison to up-and-coming nations such as China and India,” reports the Mannheim Research Institute for the Economics of Aging.

Demography matters so much that it will cripple Europe by 2050, according to a new report published by HSBC, the London-based banking group. The 46-page publication titled “The World in 2050: Quantifying the Shift in the Global Economy” projects that many European countries will drop out of the top 30 most productive nations by 2050, to be displaced by a host of emerging economies with higher birth rates.

“The small-population, ageing, rich economies in Europe are the big losers. Switzerland and the Netherlands slip down the grid significantly, and Sweden, Belgium, Austria, Norway and Denmark drop out of our Top 30 altogether,” HSBC says. “This may have implications for the ability of these economies to influence the global policy agenda,” HSBC says. “Already, Europe has been forced to concede two seats on the IMF’s executive board in order to make way for some emerging economies.”

More importantly, Europe’s social welfare economic model faces a radical reconfiguration and will cease to exist in its current form in 2050, the report says.

By contrast, the Anglo-Saxon economic model is forecast to fare well, and the United States and Britain, with highly favorable demographic outlooks, will be relatively successful at maintaining their positions.

Although China (at $24.6 trillion, constant 2000 dollars) is forecast to snatch the top spot from the United States ($22.3 trillion), according to HSBC, China will not come even close to matching U.S. living standards: Americans will be three times richer than the Chinese in 2050.

Britain at $3.6 trillion also fares well, slipping just one rank to sixth place but pulling far ahead of Italy and France, and almost displacing Germany as Europe’s biggest economy, according to the HSBC forecast. This is mainly due to Britain’s healthy fertility rate (1.9), compared with Germany (1.3), Italy (1.4), and Spain (1.4).

Another report predicts that Britain will see its population increase over the next 40 years at a far faster rate than nearly every other European country. According to a publication titled “2010 World Population Data Sheet” produced by the Population Reference Bureau, Britain will see its population swell from 62.2 million today to 77 million in 2050, an increase of 24 percent. This will make Britain bigger than France, projected to be 70 million and Germany, which is forecast to have 71.5 million citizens.

In an essay titled “Eurabia?,” the British historian Niall Ferguson writes that the world is about to witness “the greatest sustained reduction in European population since the Black Death of the fourteenth century.”

Ferguson continues: “With the median age of Greeks, Italians, and Spaniards projected to exceed 50 by 2050 — roughly one in three people will be 65 or over — the welfare states created in the wake of World War II plainly require drastic reform. Either today’s newborn Europeans will spend their working lives paying 75 percent tax rates or retirement and ‘free’ health care will simply have to be abolished. Alternatively (or additionally), Europeans will have to tolerate more legal immigration.”

But where will the new immigrants come from? “It seems very likely that a high proportion will come from neighboring countries, and Europe’s fastest-growing neighbors today are predominantly if not wholly Muslim,” Ferguson observes.

In fact, the number of Muslims in Europe has grown from 29.6 million in 1990 to 44.1 million in 2010, according to a new report titled “The Future of the Global Muslim Population.” The survey, produced by the Washington, D.C.-based Pew Forum on Religion and Public Life, projects that Europe’s Muslim population is projected to exceed 58 million by 2030.

Mass immigration from Muslim countries is already transforming European society in ways unimaginable only a few years ago, and debates about the integration (or lack thereof) of Muslim immigrants are heating up in countries across Europe (here, here, and here).

Some analysts argue that what ails Europe is not primarily a crisis of demography, but rather a crisis of spirit. In an essay titled “Troubled Continent,” Michael Novak, a scholar at the Washington-based American Enterprise Institute (AEI), writes: “The Europe that is declining in population is a Europe more rational than Europe has ever been, more scientific, less religious, less pious, more mundane, wealthier, more consumerist, more universally close to living etsi Deus non daretur (as if God does not exist).”

Novak believes that in their blind pursuit of reason, secularism, and materialism, “European elites have done their withering best to empty Europe of its Christian spirit. They have swept Europe clean just in time for the rapid rise of a rival faith prolific with children, vitality, passion, and confidence in long-term victory.”

Viewed from this perspective, Europe’s demographic decline reflects a crisis of confidence in the future: The lack of faith not only in tomorrow … but also in God … begets hopelessness. And without hope for the future, one is less likely to want to bring children into the world.

In any case, the nineteenth-century French sociologist Auguste Comte once warned that “demographics is destiny,” words that seem highly prescient in the context of contemporary Europe.