There were two summits taking place in Europe at the end of last week.

In Brussels, European Union leaders occupied themselves with yet another bout of their interminable haggling over political architecture. Yet, as the national leaders battled over how Europe should be governed, an ultimately more crucial discussion of issues that will shape the fate of the continent was taking place several hundred miles away.

Had any of the national leaders been present at the sixth Munich Economic Summit, they would have had little doubt that the discussion there – of the swift and certain ageing of Europe’s population – was of more fundamental importance than their Brussels scrap.

The demographic tides rising across the developed world, and which will before long engulf the entire European continent, are now fairly well recognised.

Most of us understand that Europe is turning grey; that more and more of us will soon join legions of the elderly, even as the numbers of those of working age left to support the old dwindle.

But if this problem has become pretty well-known, the startling size of it is sometimes forgotten. So, too, is its urgency.

The Munich summit, organised by the CESIfo Group, the leading think-tank based at the Bavarian capital’s university, and by the BMW Foundation Herbert Quandt, offered a compelling reminder of the extent of the demographic shift, and of its pervasive repercussions.

The basic numbers leave little doubt over how high the stakes really are. By 2050, ever-lengthening lifespans and slumping birthrates mean that Europe’s population of working age will drop by 38 million. At the same time, numbers aged 65 and over will rise by 40 million. That will swell the EU’s pensioner population to more than 100 million. The number of workers for every individual of 65-plus will fall from more than three to fewer than two.

It is hard not to react with the same sort of gloom that grips us individually when we contemplate eventual decrepitude. Is Europe, too, doomed to senescence?

A more hopeful scenario that energised the academic, political and business leaders in Munich was set out by Klaus Kleinfeld, outgoing chief executive of Siemens. His vision was one in which the challenges of an ageing continent were turned into opportunities; in which innovations in healthcare and social reform allowed Europe to age with grace and happiness, while remaining dynamic.

But can such an optimistic future conceivably be possible? A key cause for optimism is medical progress. Fortunately, we are in the midst of an era of rapid and accelerating advancement and innovation in pharmacology and biotechnology. New pharmaceutical compounds and gene-based therapies hold out the promise of mitigating, if not ending, the worst aspects of ageing. Older people are already healthier than ever before; they will almost certainly become much more so.

A healthier elderly population is also one that can be active for longer and make a continuing contribution to economic growth. Thus, the second element of making an ageing Europe work is just that – extending working lives.

For politicians, it will be hard to sell later retirement to a generation that has watched parents put their feet up for good at 50. But, together with significantly more saving before retirement, this is inescapable. To make this possible, so, too, are fundamental changes to the jobs market, workplace culture, and attitudes to older people.

As the burgeoning ranks of the old in turn sends the cost of state pensions ballooning, cuts in the generosity of these, as well as of other benefits, will also be unavoidable. Thus, the sooner politicians steel themselves to communicate this hard truth, the faster and better electorates will come to understand the changes that lie before us.

There are two further, and critical, political challenges that leaders must confront. The first concerns immigration, the second productivity.

Since Europe is about to run out of able workers, but will have its ever-older army of the old to support, a clear implication is that politicians must confront hostility to immigration, which must be part of the solution. It can, however, be only a part since the numbers of migrants required to stabilise the labour force is too large to be feasible, either politically or practically. EU figures suggest that a net 1.6 million immigrants a year would be needed Europe-wide. In Britain, this would mean a more than doubling of the population by mid-century.

This leads us to the issue of productivity and economic reform.

Since national growth potential is determined by two principal factors, the working population and its productivity, or output per person, a declining pool of labour threatens to undercut growth and living standards. That threat will be exacerbated, too, by the effect of increased saving of existing workers on consumption and investment.

Enhancing productivity to offset a shrinking workforce is, therefore, vital. But it is no secret that the EU’s so-called Lisbon agenda, launched with a fanfare in Portugal at the turn of the decade, and supposed to make Europe the world’s most dynamic economy, has run into the sand as leaders have shrunk from essential structural reform. This lack of will was evident again last week as the Brussels summit scrapped a treaty commitment to “free and undistorted competition”. Yet this cannot continue. Radical and determined reform is now urgently required, and failure will come at the highest of costs. An ageing Europe is one with no time to waste.

There is, it should now be obvious, no simple or easy solution to Europe’s looming demographic transition.

However, with fortune and fortitude, it also seems clear that a Europe with one foot in the grave is not – after all – quite dead yet.

And, as Maurice Chevalier observed: “Old age is not so bad when you consider the alternative.”

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