The world’s most under-appreciated problem is demographic decline mixed with tax-and-transfer entitlement programs.

Those two factors, when combined, are a massive problem. All of which is explained in my series on demographic change and fiscal crisis (see here, here, here, here, and here).

Today, let’s focus on the problem in Europe, building on what I wrote 10 years ago.

And our column will revolve around four visuals.

Let’s start with this chart from the European Commission’s recent report on Demographic Transformation in the EU.

The top half is the projected population of European nations over the next seven-plus decades (the blue line assumes continued immigration and the orange line assume no immigration).

My concern is the bottom half of Figure 12 (which I’ve highlighted in red). It shows that the old-age dependency ration is going to climb from about 35 percent to 60 percent-75 percent, depending on immigration.

By the way, while these numbers look grim, they are even worse than most people think. Because not only do you need young workers to support old people, you need those young people to be productively employed, not mooching off welfare or filling make-work jobs in government bureaucracies.

Next we have a chart from a new study from the International Monetary Fund.

Authored by Serhan Cevik, it shows how fertility rates have collapsed in Europe on the left. The right chart shows the correlation between fertility rates inflation-adjusted per-capita economic output.

What happens when you have more old people and fewer young taxpayers (as well as economic anemia)? You have a rising burden of government spending.

As you look at this data from the European Commission’s most-recent Ageing Report, don’t forget that most European nations already are suffering from stifling fiscal burdens.

Yet, if you look at the column I’ve highlighted, the problem will get worse – in some cases, much worse – in the next few decades.

Last but not least, if the disease of excessive spending is getting worse, it’s almost inevitable that the symptom of red ink will get worse at the same time. And that’s exactly what we see in the most-recent forecast from the European Commission’s Debt Sustainability Monitor.

While the above four charts are the focus of today’s column, Rob White has an insightful column about the implications and consequences of Europe’s demographic decline in the U.K.-based Telegraph. Here are some excerpts.

…many young people – now expected to work for longer to foot the existing pensions bill and losing faith that the state will be able to afford such payouts by the time they retire – are taking to the streets. …Two thirds of EU residents also have no pension savings, leaving up to 170 million people sleepwalking towards a retirement on state-sponsored benefits. …For some, the simplest and fairest way to cut state pension spending was to increase the age at which people can claim it. With life expectancy increasing into the 80s, these nations argued that people didn’t need to retire at 60. …Far from raising their state pension age, the French hold the distinction of being one of the only European countries to have reduced it. …France now has one of Europe’s lowest retirement ages at just 62, and hands almost 15pc of its GDP to pensioners. …To avoid raising the retirement age and incurring the wrath of its populace, some nations have opted for the stealthier option of increasing state pension contributions. In Luxembourg, the cost of state contributions is equally split between the state, employer and the employee. It rose from 8pc to 8.5pc across the board in January. …Romania announced a major package of reforms last year that included freezing state pensions until at least 2027. …Bulgaria has now resorted to increasing pension contributions and the age at which people can retire, further fuelling the resentment among a younger generation.

P.S. Since we just read some excerpts about how different nations are responding to the demographic crisis, here’s a bonus chart from @MichaelAArouet. It shows pension liabilities in select European nations.

Note that the Netherlands (NL), Sweden (SE), and Denmark (DK) have substantial purple sections of their bars. That’s because all of those nations have personal retirement accounts based on real saving and investment. Click here, here, and here to learn more about the accelerating shift to private old-age systems in Europe.