This is a problem for most developed countries, but Italy is in the vanguard of this unprecedented demographic reality: Italy already has one of the highest old age dependency rates in Europe, and it has the region’s highest median age; it has the second highest Government debt-to-GDP ratio in the Eurozone, and one of the region’s lowest fertility rates (far below the population replacement level.)

This demographic change can be seen well in advance due to the slow nature of population change. So, without some extraordinary intervention (like the Government significantly raising the retirement age, or allowing a massive increase in immigration) the outlook for the Italian taxpayer is very likely to worsen rapidly.

The figures, as shocking as they look, are only part of the story. The equation is even more alarming when not simply counting the number of retirees, but also factoring in their far higher cost to the Government. The elderly consume far more resources, both in terms of pensions and medical and care costs, than any other age group. Estimates suggest that the average retiree costs the Government three times that of working-age people in terms of annual spending. As a result, the declining number of taxpayers available to support the rising number of expensive-to-maintain, non-working retirees will mean the tax burden on the working population of Italy is likely to become increasingly unbearable – and not in the distant future.

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