‘A society is in decay, final or transitional, when common sense really becomes uncommon.’


The economy – major areas of expenses and investments


The European population decline will have both pull the economy in opposite directions and create a number of threats and opportunities.

The impact will not be homogeneously felt throughout Europe as the decrease in population is very uneven across the continent with countries in Central / Eastern Europe, such as Romania, having the sharpest decline and several rural areas nearly abandoned.

This creates opportunities for land acquisition at low prices for agricultural production or to establish villages for retirees from richer developed countries who will thus have a higher buying power.

There are, however, a number of commonalities among the various European countries.

One of these is the increase in health care costs.

Half the health care costs are spent on persons over 60 years of age and persons over the age of 65 account for one third of the hospital stays. This translates in the fact that health care expenditures in the EU represent 7.1% of GDP and should reach 8% in 2050. Long-term care represents 40% of those costs.

There are investment opportunities in assisted domestic living – smart homes that allow the elderly who are not invalid to continue to have a relatively independent life through the provision of a number of technological innovations that allow him to live in a safe and comfortable environment while being monitored.

Domestic services such as housecleaning and cooking will offer investment opportunities in countries where private services are allowed and profitable.

Assisted domestic living is centered on the use of smart devices. Examples are telehealth, telemedicine and mobile health services the development of which offers important investment opportunities.


Europe has immense needs in rebuilding, maintaining or building infrastructure. Part of those needs stem from the need to address an ageing population. Total infrastructure investments required have been estimated at 3.6% of GDP.

One of the main efforts will be in favor of domestic assisted living – i.e. maintaining older persons at home rather than sending them to expensive retirement homes.

This would require investments in remote monitoring including smart wearable devices, alert and intervention systems. For such systems to function, connectivity through satellite services is essential.

Adjustment of urban facilities will also be required – such as longer pedestrian lights in street crossings, increased number of public transport as elderly people drive less, larger number of bus stops to reduce the walking distance between each, frequent benches and public toilets, etc.

Isolation of the elderly is an important issue, and cities may have to be re-planned to be more compact. Public meeting spaces will have to be built to facilitate contact between the elderly.

Infrastructure investment funds, particularly those targeting social infrastructures could be a good buy. However, government actions such as changes in regulations, already complex and not very transparent, or additional taxes could reduce returns on such funds. Time for the implementation of the projects might also be drawn out for a number of reasons that are difficult to foresee.


Presently the state pension systems in Europe are on a pay-as-you-go basis, meaning that today’s contributors pay the pensions of the retired workers. In a situation where there are not enough payers, the system will collapse.

Under the present system, people taking their pension receive either a pension related to the earnings at a certain period of their life or a flat rate.

In the Swedish Notional Defined Contributions scheme, the contributions are earmarked for a specific person and are not part of a pool that serves to pay present pensioners. At retirement, these funds are used to purchase an annuity. This system could be introduced in other countries.

In search of yields, pension managers may be encouraged to make riskier investments.

There are several solutions to the increased burden of retirements:

– Allow for a stagnation of the top salaries

– Increase the contribution of the top salaries


Immigrants and their families require education, health services, housing and food. While the positive contribution of immigrants to the economy cannot be denied, there is an initial cost in allowing the immigrants to settle, train or retrain.

This offers opportunities for companies specializing in services to migrants, from housing to training.


Countries with a reduced population will be unable to raise major armies and will therefore increasingly rely on cyber sabotage or interference, and guided or nuclear weapons as a dissuasive means.

This should be beneficial for companies developing sophisticated guided weaponry systems.

The economy – major areas of income


A smaller population implies lower tax receipts and immigrants tend to pay lower taxes as they have lower income, in particular because in most cases, the women do not work.

As the available manpower shrinks, salaries should rise and inflation may pick up, at least on goods manufactured in Europe, unless borders are opened to allow massive immigration flows.

The entry of immigrants into the employment market will put pressure on salaries by increasing the availability of the labor force particularly with the low-qualified part of the labor force and with certain types of professionals if the migrants arrive fully qualified. This may, however, increase the profits of corporations and entrepreneurs as they reduce their costs particularly in highly labor-intensive activities.

Should immigration be restricted, there will be an increase in labor costs, with a loss of competitivity in international markets.

Migrants also remit funds abroad, thus spending on consumer goods or contribution to savings is reduced as compared to that of the national workforce.

Another flow of funds out of Europe would be due to pensioners from advanced economies might move massively to countries with lower costs of living, leading to capital outflows. Central European countries would be a clear European option but there are also non-European countries such as in South-East Asia or Central / South America.

Savings and interest rates

The direction of interest rates is uncertain and tied to the behavior of the future retirees.

Working adults may increase their savings rate during their working life followed by drawing down at retirement. This will have an impact on interest rates, first decreasing them, then increasing them.

Should interest rates remain low, there will be a housing boom as consumers would want to benefit from low rates on mortgages.

However, financial institutions and pension would struggle to make profits in periods of low interest rates and this situation would further endanger pension funds and even the entire financial system leading to a persistent deflation.


Innovation is a key driver for wealth creation and while it has been generally accepted that innovation is essentially the premise of younger people, this appears to be no longer the case with older persons starting a new career as entrepreneurs at retirement.

Therefore the assumption that the economy will lack the input of the innovative entrepreneurs may not be correct after all.

The economy – sovereign debt

In many European countries, the public economy is very largely financed by debt which translates into pushing the brunt of the deficits to the following generation or generations with the risk that as debt accumulates, countries may end up defaulting.

Since the 2008 economic crisis, a number of European countries have issued debts with very long maturities, called ‘Methuselah’ bonds, structured to attract investors with interest rates slightly higher than the rest of the offerings on the market. Belgium, Eire, France, Italy and Spain have been issuers of these long-termed bonds.

Over the long term, countries may have to resort to creative approaches to reduce a debt that may turn out to be unbearable.

The silver economy

‘The silver economy’ is the term used to describe the new markets created to cater to the needs of an aging population.

The size of the European market is of Euros 450 billion representing 25% of GDP and is growing at the annual rate of 4%. It is expected to have a major repercussion on the employment market with predictions ranging from a loss of 2 million jobs to the creation of 4 million jobs.

The sectors that will be impacted positively are recreational activities including tourism, as well as the following industries: cosmetics, food supplements, producers of glasses / contact lenses, pharmaceutical products and biotechnology,

Products for the Muslim Population

In view of the large number of Muslim migrants, usually with families larger than the European average, and with their numbers expected to grow to reach 14% of the entire European population by 2050, there is a large demand for products specifically addressing their religious growth.

This includes special clothing, in particular for women, but also particular foodstuffs such as Halal meat, products approved by religious prescriptions, and Islamic financial products.


Investment recommendations

Land and real estate in Central and Eastern Europe

Creation of retirement villages in Central and Eastern Europe for retirees from the more advanced European economies

Companies offering assisted domestic living systems

Companies offering domestic services such as housecleaning and cooking

Companies offering services to migrants

Companies producing advanced weapon systems

Companies offering recreational activities and tourism targeting seniors

Manufacturers of anti-aging cosmetics

Manufacturers of food supplements targeting the seniors

Manufacturers of reading and hearing aids

Pharmaceutical and biotechnology companies developing life-extension products

Manufacturers of products and services specifically targeting the Muslim population.


Our financial analysts can be conducted for detailed discussions about more specific investment recommendations.

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