Demographic changes have an impact on the economic situation of all West European countries. Aging of the population and falling fertility rates are challenges that every government on the continent must deal with. The analysis was based on data concerning demographic situation in Germany. It is the most populous country of the European Union, which has been struggling with crucial demographic changes for several decades. The German government has an active pro-family policy, which mainly aims to increase the number of births. Yet, according to forecasts, the population of Germany will decrease, reaching 80% of the population of 2012 by 2060. The purpose of this paper is to examine the causes of demographic changes in Germany, their effects on the public finances, and the potential effects of the implementation of measures to neutralize the unwanted economic phenomena. The main conclusion is that the public finances of Germany will have to cope with new demographic situation, which may involve the need to further reform the pension system, develop a comprehensive family policy, and the activization of the elderly.

Demographic changes have an impact on the economic situation of all West European countries. Aging of the population and falling fertility rates are challenges that every government on the continent must deal with. The analysis was based on data concerning demographic situation in Germany. It is the most populous country of the European Union, which has been struggling with crucial demographic changes for several decades. The German government has an active pro-family policy, which mainly aims to increase the number of births. Yet, according to forecasts, the population of Germany will decrease, reaching 80% of the population of 2012 by 2060. The purpose of this paper is to examine the causes of demographic changes in Germany, their effects on the public finances, and the potential effects of the implementation of measures to neutralize the unwanted economic phenomena. The main conclusion is that the public finances of Germany will have to cope with new demographic situation, which may involve the need to further reform the pension system, develop a comprehensive family policy, and the activization of the elderly.