How the Boomers Screwed Europe¶

Source: How the Boomers Screwed Europe by The Economist (Charlemagne Column)

TL;DR¶

The primary fault line in European inequality has shifted from horizontal (West vs East) to vertical (Boomers vs Millennials/Gen Z). Key grievances: young adults unable to move out of their parents' spare rooms due to sky-high house prices; 30-somethings paying hefty taxes to fund pensions for retirees who left the workforce in their prime. Costs related to ageing already consume a quarter of the EU's GDP, projected to rise further. The column characterises this as an "intergenerational confidence trick" — the Boomer generation knowingly secured its own prosperity by pushing fiscal and social debts onto its children and grandchildren.

The New Fault Line¶

For decades, the defining divide in European politics was the East-West split — the gap between the wealthy core (Germany, France, Benelux, Scandinavia) and the poorer periphery (Portugal, Greece, and especially the former communist states of Central and Eastern Europe). EU structural funds, migration, and convergence programmes were designed to close this gap.

That gap has narrowed dramatically. But a new divide has opened: between generations.

The Charlemagne column presents the data starkly:

The costs related to ageing already consume a quarter of the EU's GDP — and are projected to rise further.

The Symptoms¶

Housing¶

Young Europeans face a housing market that their parents' generation systematically gamed. Boomers bought homes when prices were low relative to income, benefited from decades of house price appreciation, and now own much of the desirable housing stock. Millennials and Gen Z face:

House prices 6–10× average income in major European cities
Stagnant real wages despite rising productivity
Strict rental markets that protect sitting tenants (often Boomers) at the expense of new entrants
Inheritance advantages — Boomer wealth cascades downward, but unequally, creating a new "property aristocracy"

Pensions¶

The most direct transfer: today's young workers pay some of the highest payroll taxes in the world to fund public pensions for current retirees. The arithmetic is brutal:

Fewer workers per retiree — the dependency ratio is deteriorating across Europe
Generous indexation — many European pension systems link benefits to wages, not prices, guaranteeing real growth for retirees
Early retirement — many Boomers retired in their late 50s or early 60s, drawing pensions for 25–30 years while contributing for 35–40

The intergenerational bargain that sustained European welfare states — each generation pays for the one before, trusting the next will pay for them — was built on assumptions about population growth and productivity that no longer hold.

Labour Markets¶

Boomers designed labour market institutions that benefit insiders (older, established workers) at the expense of outsiders (young, entrants):

Generous severance makes companies reluctant to hire young people permanently
Seniority-based pay means wages rise with age regardless of productivity
Dual labour markets — protected permanent workers (mostly older) vs precarious temporary/gig workers (mostly younger)

The Intergenerational Confidence Trick¶

The Economist's framing is deliberately provocative: the Boomer generation did not merely inherit an advantageous position. They actively designed institutions that transferred wealth and security from future generations to themselves.

The column characterises this as an "intergenerational confidence trick" — the Boomers knowingly secured their prosperity by pushing fiscal and social debts onto their children.

Key elements of the trick:

Unfunded pension promises — Boomers voted for generous pension expansions while rejecting the tax increases needed to fund them
House price inflation — Boomer NIMBYism restricted housing supply, ensuring that the Boomers' largest asset (their homes) appreciated at the expense of young buyers
Climate debt — Boomers presided over the carbon-intensive growth that created the climate crisis, leaving the costs of transition and adaptation to younger generations
Public debt — pandemic-era borrowing and ongoing fiscal deficits will be serviced by future taxpayers

Is It Unfair?¶

The column acknowledges that intergenerational comparisons are fraught. Some elderly Europeans are poor; some young Europeans are rich. Boomers lived through economic shocks (oil crises in the 1970s, high unemployment in the 1980s). And technological progress means younger generations have access to things their grandparents could not have imagined.

But the systematic nature of the transfer is hard to deny. The EU's own data shows that:

The median net wealth of over-65s in the EU is now higher than that of under-35s
Homeownership rates for under-35s have fallen by 10–20 percentage points across most EU states since 2000
Youth unemployment in Southern Europe remains above 20% even in good years

The Political Consequences¶

The vertical fault line has not yet fully expressed itself in European politics, but the signs are there:

Support for radical parties among young voters across Europe
Declining support for mainstream centre-left and centre-right parties among under-40s
Generational wedge issues — climate policy (young favour stronger action), housing reform (young favour liberalisation), pension reform (young favour later retirement ages and less generous indexation)

The column warns that if European democracies cannot address the intergenerational bargain, they risk a political realignment that makes the East-West integration challenges of the 2000s look simple by comparison.

Key Takeaways¶

Europe's inequality divide has rotated — from West vs East to Boomers vs Millennials/Gen Z.
The welfare state is the mechanism — generous, unfunded pension promises transfer wealth from young workers to old retirees.
Housing is the symbol — Boomer homeowners blocked development to protect their asset values, pricing out the next generation.
It was not an accident — institutions were deliberately designed to benefit insiders (older workers) at the expense of outsiders (the young).
The political reckoning is coming — the intergenerational bargain is unsustainable, and the politics will be explosive.