The European Commission’s 2024 Ageing Report (2024) estimates that “the EU population is projected to decline from 449 million people in 2022 to 432 million in 2070”. The demographic shift will increase public expenditures to face the total cost of ageing, rising from an EU average of 24.4% of GDP in 2022 to 25.6% by 2070. Pension and healthcare systems are the main contributors to this fiscal strain.
Italy will experience a decrease in the total cost of ageing over the projection horizon, but by 2050, the costs due to ageing will increase by up to 1%.
The Debt Sustainability Monitor 2023 also warns that high-debt countries like Italy could experience debt-to-GDP ratios exceeding 150% by mid-century unless urgent corrective action is taken.
The study by Ajovalasit et al. (2024) confirms these trends, showing that Italy faces one of the most severe fiscal challenges due to its rapidly ageing population, low fertility rates, and slow economic growth (see also Zsolt et al., 2024). The authors use stochastic debt models inspired by Zenios and Consiglio et al. (2021), which incorporate uncertainty into debt sustainability analysis, allowing policymakers to optimize debt issuance and reduce refinancing risks under various economic and demographic scenarios. This integrated approach is critical for Italy’s fiscal management amid demographic pressures.
