1. The Economic Challenges of Ageing - across EU countries - Anda Patarau European Commission Directorate General for Economic and Financial Affairs Fiscal Policy and Demographic Change Ljubljana, 22 June 2016

2. Outline The demographic challenge of ageing  Economic and fiscal consequences  Potential measures Ageing Report 2015

4. The Demographic Challenge Dramatic changes in the population structure in the EU and in the world over the coming 50 years Old age dependency ratio (people aged 65 or above relative to the working population, %) Source: The 2015 Ageing Report

5. Potential GDP Growth Composition, EU (annual average growth rates) Economic Demographics as Consequencesa Resource EU Potential GDP growth is projected to remain fairly stable over the long term, with labour productivity growth, driven by TFP growth, as the sole source of potential growth. Source: The 2015 Ageing Report

6. Population ageing puts upward pressure on public spending in the EU with large differences across Member States Fiscal Demographics as Consequences a Cost Total age-related expenditure composition, baseline scenario Slovenia vs. the EA (pp. change in share of GDP, 2013-2060) Total age-related expenditure, EU 28 (pp. change in share of GDP, 2013-2060) Pensions Education Long-term care Health care Source: The 2015 Ageing Report Unemployment benefits

7. Measures Overall progress with pension reforms indicates that average EU pension spending will not be higher in 2060, but there are large differences across Member States Public Pension Expenditure across successive waves of projections (pp. change in share of GDP over the projection horizon) Public Pension Expenditure (pp. change in share of GDP 2013-2060)

8. Measures Pension Reforms Automatic mechanisms have proven effective in dealing with the effects of increases in life expectancy. Supported by the Eurogroup in its statement Common principles for strengthening pension sustainabilityCommon principles for strengthening pension sustainability, adopted on 16 June 2016

9. Impact of pension reforms on labour force participation Measures Source: The 2015 Ageing Report

10. Progress containing total age - related expenditure increase Total Age-related Expenditure (pp. change in share of GDP over the projection horizon) Measures Source: The 2015 Ageing Report

11. 11 Thank you

12. 12 Fiscal sustainability risks in the EU Overall Heat Map The cost of ageing is an important contributor to fiscal sustainability risks in the EU. Slovenia is the only EU country facing high fiscal sustainability risks in the long term. Fiscal Consequences

13. 13 Population ageing puts upward pressure on public spending in the EU with large differences across Member States Fiscal Consequences Total age-related expenditure composition Slovenia, Belgium and the EA (% of GDP, 2013 vs 2060)

14. The demographic factor contributes the most to the increase in public pension expenditure Public Pension Expenditure Composition, EU28 + NO (% of GDP) Fiscal Consequences Source: The 2015 Ageing Report

15. Measures  Change public perception of what 'old' is