Part I of this series looked at how Europe’s population pyramid is becoming a cylinder.

Part II of this series looked how Europe’s age-dependency ratio is getting much worse.

Today’s column will focus on the fiscal implication of Europe’s low fertility rate. We’ll start with this map from Visual Capitalist (the group I recently criticized, albeit for a mistake presumably based on ignorance rather than bias).

To have a stable population, the fertility rate needs to be 2.1. As you can see, only tiny Monaco is at that level. Other nations either have fertility rates that mean either shrinking populations (orange) or rapidly shrinking populations (pink).

There’s nothing wrong with a nation’s people deciding to have very few children.

But when those same nations have redistribution programs that largely transfer money from young workers to old retirees, low fertility rates can have catastrophic implications.

It’s why I think another European fiscal crisis is inevitable (see here, here, and here).

Here’s a chart that starkly illustrates changing demographics in some of Europe’s main nations.

What matters, of course, is the number of productively employed working-age people compared to the number of people feeding at the public trough (often referred to as the aforementioned age-dependency ratio).

That being said, this chart is simply another way of showing Europe’s dramatic demographic decline.

I’ll close by observing that not all European nations face the same risks.

The ones with low fertility rates (pink in the above map) are in greater danger. But the possibility of a fiscal crisis also depends on the overall burden of government spending, the existing level of government debt, and whether nations have protected themselves from demographic decline with private retirement accounts.