Successive European Councils have recognised the need to tackle the impact of ageing populations on the European social models. The policy challenge is broad, covering the ongoing debate on modernisation of welfare systems and extending working lives as a follow-up to the Hampton Court Summit of October 2005, the renewed Lisbon strategy, the renewed EU Sustainable Development Strategy and the "Integrated climate and energy policy", the Open Method of Coordination on pensions, health care and long-term care and a strategy for youth [1], and ensuring progress towards sustainable public finances in the context of the Stability and Growth Pact.

It is within this framework that the ECOFIN Council instructed the Economic Policy Committee and invited the Commission to update the long-term budgetary projections by the end of 2009. The joint projections [2] which apply new, upgraded methodologies, broadly confirm the projections of 2006. They provide key input to the analysis of the impact of population ageing and are an integral part of the EU's multilateral budgetary surveillance. They will also be of use for policy-makers in preparing reforms of pension and health care systems.

This Communication presents the latest long-term economic and budgetary projections and a first take on the Commission's views on Europe’s ability to tackle the challenge of ageing in view of new data and the current economic developments.

Recent analysis confirms that there is a window of opportunity – a period of about ten years during which labour forces will continue to increase – for implementing the structural reforms needed by ageing societies [3]. Taking no action would weaken the EU's ability to meet the future needs of an ageing population.

The economic crisis could make the challenges created by ageing more acute. The deployment of a targeted and well-coordinated policy response to the crisis, as outlined by the European Economic Recovery Plan [4] (EERP) adopted by the Commission on 26 November 2008, must therefore be seized as an opportunity for concerted efforts to overcome the recession by supporting economic activity in the short run and through reforms geared at strengthening investment in a more sustainable economy and society and putting age-related spending on a sustainable path [5]. Investment to boost training and human capital will help address the impact of the crisis in the short run and contribute to preparing for an ageing society.

1 COM (2009) 200 final.
2 See the '2009 Ageing Report: economic and budgetary projections for the EU-27 Member States (2008-2060)', European Economy, forthcoming and 'Demography Report 2008: Meeting Social Needs in an Ageing Society (SEC (2008) 2911).
3 COM (2006) 571 final.
4 COM (2008) 800 final.
5 See the '2006 Sustainability Report', European Economy, No 4, 2006.