Strike fear: Iran’s protests and Israel

Summary

Economist Podcasts – "Strike Fear: Iran’s Protests and Israel"

Date: January 12, 2026
Host: Jason (The Economist)
Key Guests: Anshel Pfeffer (Israel Correspondent), Carla Subidana (News Editor), Henry Tricks (US Technology Editor)
Main Interviewee (excerpted): Benjamin Netanyahu (Israeli Prime Minister)

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Episode Overview

This episode of The Intelligence explores the renewed protests in Iran, their violent suppression, and the complex ways these events shape Israel’s regional calculations, particularly in the wake of the recent Israel-Iran conflict and American responses under President Trump. In addition, the episode discusses how generative AI is transforming the job market for the class of 2026 in America, and the looming pension crises gripping Europe as an aging population strains fiscal and political resources.

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Section 1: Iran’s Protests, Repression, and Israeli Concerns

Main segment: 01:17 – 13:16

Key Discussion Points & Insights

• Escalation and Suppression in Iran

  • Authorities in Iran are violently suppressing protests, with nearly 500 protesters reportedly killed; actual numbers are likely higher.
    • “Across the country, cities and towns, demonstrators are being mowed down, 490, according to a Washington based human rights group. That's almost certainly an undercount.” – Jason (01:50)
  • The current unrest is perceived as more significant than previous waves, especially given its connections to recent conflict with Israel.

• Israeli Perceptions and Fears

  • Israeli leadership is wary the protests could lead to Iranian regime attempts to deflect from internal instability through external aggression.
  • June’s brief but intense war between Israel and Iran broke certain psychological barriers, emboldening both Iranian protesters and Israeli officials regarding possible regime vulnerability.
    • “This may have in a way broken something of the barrier of fear that kept people from protesting against the regime.” – Anshel Pfeffer (04:30)
  • Israelis monitor not only protest hotspots but also military infrastructure for signs of missile preparation.

• Why Might Iran Strike Israel Now?

  • Deflection: War might distract from domestic woes or rally national unity.
  • Strategic Calculation: Fear Israel or America will strike first could prompt Iranian preemption.
  • Restoring Deterrence: Embarrassment over Israel’s success during June’s exchanges may provoke retaliation.
  • American Factor: President Trump’s threats increase regional tension. Retaliation against American allies (like Israel) is seen as a likely Iranian response to US attacks.
    • “These are all reasons why Israel is concerned that this could actually be the moment when Iran, despite the regime being very much embattled now at home, may try to take an opportunity and attack abroad.” – Anshel Pfeffer (06:45)

• Will Israel 'Finish the Job'?

  • While hawkish rhetoric has persisted, current Israeli priorities include replenishing missile defenses and not appearing overly aggressive.
  • Netanyahu displayed less bellicosity in the Economist interview versus his recent meeting with Trump at Mar-a-Lago.

Notable Interview Quotes

• Netanyahu on War and Regime Change:

  • “People ask me during the war, is your goal regime change? And I said, no, it's not. But it could be the consequence of the war if we were successful. And we were successful.” (Benjamin Netanyahu, 02:59)

• Netanyahu’s Measured Response to US Pressure:

  • When asked if American pressure for regime change was a good idea:

    • “I think there is pressure. Everybody wants to see that. But I said, I was asked about that and I said, I'll tell you one definite time when we would resume our military activities. If Iran attacks us, which they might, then there will be horrible consequences for Iran. That's definite. Everything else, I think we should see what is happening inside Iran.” (Benjamin Netanyahu, 09:02)

  • “Revolutions are best done from within.” (Netanyahu, 09:42)

  • Anshel Pfeffer interprets this as a rare case of Israel stepping back from overt threats, seeking to “lower the Israeli profile and for it not to be seen as if Israel is in any way interfering in the internal issues within Iran.” (09:48)

• Netanyahu’s Metaphor for Iran’s Military Program:

  • “It's akin to somebody who has horrible cancer, the attempt to build atomic weapons and the other is the attempt to build 20,000 ballistic missiles. So we had to take it out. But when you take out these lumps of cancer and certain types of lumps of cancer can reappear, if you don't take it out, you'll die.” (Benjamin Netanyahu, 10:32)

Israeli Opportunism and Strategic Calculus

• Immediate Concerns:
  • Law-and-order breakdown could risk Iranian missile and nuclear assets falling into dangerous hands or being used as bargaining chips.
  • Iran’s regional proxies may weaken as the regime turns inward—potential benefit for Israel.
    • “Iran... will have to focus much more now inwards... simply won't have the money, all the attention span to continue building and maintaining this network. And that suddenly... would be a major gain.” – Anshel Pfeffer (12:19)
• Long-Term Hopes:
  • Possibility for post-regime Iran to return as an Israeli ally, recalling pre-1979 close ties—though not imminent, this is viewed as a ‘desired result for Israel.’ (12:57)

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Section 2: The “ChatGPT Generation” Hits the Labor Market

Segment: 14:39 – 21:19

Key Discussion Points & Insights

• First Fully AI-Native Class Graduates

  • The 2026 American university class is the first to have used generative AI like ChatGPT throughout their college education. Their impact on—and vulnerability to—the job market is a central question.
  • “America's class of 2026 will be the first members of the ChatGPT generation to graduate.” – Henry Tricks (15:16)

• Workplace Transformation

  • By end of 2026, up to 40% of workplace applications may be performed by AI agents, particularly threatening entry-level and junior roles.
  • “What we're likely to see in the short term is... the diamond structure, which now means... few people at the bottom, but you have a big rump of people in the middle.” – Henry Tricks (18:24)
  • Longer-term, firms may flip to an ‘hourglass’ model, with AI-native youth leapfrogging mid-career ‘laggards’ displaced by automation.

• Implications for New Grads

  • Double down on AI literacy and actively seek jobs where AI is less disruptive.
  • “Whatever option you choose as a graduate, you have to make the case to potential employers that it's really important to hire young talent, notwithstanding the rise of the agents.” – Henry Tricks (20:43)

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Section 3: Europe’s Looming Pension Crisis

Segment: 21:49 – 27:47

Key Discussion Points & Insights

• Aging Demographics and Exploding Costs

  • European societies are aging fast; by 2070, only two working-age adults will support each person over 65.
  • In France, Spain, Italy (“unfunded” systems), pensioners enjoy long retirements and generous payouts covered by contemporary workers—an increasingly unsustainable arrangement.
  • “If there's a shrinking pool of contributors, pension generosity must inevitably fall.” – Carla Subidana (23:18)

• Comparing European Responses

  • Northern countries (Netherlands, Denmark, Sweden, Switzerland) with funded schemes are better prepared.
  • Denmark’s bold reforms include hiking retirement age to 70 by 2040.

• Political Gridlock

  • Raising retirement ages or reducing benefits is deeply unpopular; reforms have triggered mass protests and government crises (e.g., in France 2023-24).
  • “Governments are very scared of angering pensioners as they're a very important electoral force.” – Carla Subidana (26:30)

• Fiscal Consequences

  • Nations like France, Belgium, Norway, and Austria will devote up to 30% of GDP to aging-related costs by 2045; only countries with substantial sovereign wealth (e.g., Norway) can afford this without crisis.

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Notable Quotes & Memorable Moments

• “Revolutions are best done from within.” – Benjamin Netanyahu (09:42)
• “If Iran attacks us, which they might, then there will be horrible consequences for Iran. That’s definite. Everything else, I think we should see what is happening inside Iran.” – Benjamin Netanyahu (09:11)
• "America's class of 2026 will be the first members of the ChatGPT generation to graduate." – Henry Tricks (15:16)
• “If there's a shrinking pool of contributors, pension generosity must inevitably fall.” – Carla Subidana (23:18)
• “Governments are very scared of angering pensioners as they're a very important electoral force.” – Carla Subidana (26:30)

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Useful Timestamps

• Iran & Israel Segment Start: 01:17
• Netanyahu Interview Clip: 02:59
• Israeli Fears Explained: 04:12
• Israel’s Military Calculus & US Factor: 05:33 – 07:43
• Netanyahu’s Current Stance: 08:24 – 10:49
• Long-term Regional Prospects: 12:00
• AI and Job Market Segment Start: 14:39
• Pension Crisis Segment Start: 21:49

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Tone & Style

The episode maintains The Economist’s typical measured, analytical tone—skeptical, deeply sourced, occasionally laced with wry understatement. The guests and interviewers provide factual context and cautious predictions rather than speculation, always linking storylines to their broader geopolitical or economic implications.

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For more in-depth analysis and interviews, see The Economist’s website and digital app.

Transcript

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[Jason]

The economist. Hello and welcome to the Intelligence from the Economist. I'm Jason Every weekday we provide a fresh perspective on the events shaping your world. There's a whole graduating class coming in 2026 that will have had generative AI at its fingertips for the whole of its college education. We ask how those grads will fare in the workplace and how the workplace is likely to change to accommodate them. And pensions in Europe are a fiscal time bomb as demographics change, and shoring them up by changing retirement ages or benefits is politically dangerous. We look at what must and what might happen to fend off crises across the continent. But first, In Iran, the authorities are using an ever heavier hand to suppress the protests we were talking about on Friday. Across the country, cities and towns, demonstrators are being mowed down, 490, according to a Washington based human rights group. That's almost certainly an undercount. We've said this before, I know, but what's going on inside Iran really is different this time, which makes for a different dynamic outside it, in particular for its principal rival in the region.

[Benjamin Netanyahu]

People ask me during the war, is your goal regime change? And I said, no, it's not. But it could be the consequence of the war if we were successful. And we were successful.

[Anshel Pfeffer]

On Thursday we interviewed Benjamin Netanyahu, the Prime Minister of Israel. When I say we, my bosses Editor in Chief Sani Minton Beddoes and Deputy Editor Ed Carr. I was there as well in the Prime Minister's office studio in Jerusalem.

[Jason]

Anshel Pfeffer is the Economist's Israel correspondent.

[Anshel Pfeffer]

Naturally, we wanted to ask Netanyahu about the protests which were already then gripping Iran. Since then, the protests have intensified and we have a lot of evidence of very violent suppression by the Iranian authorities. Reports of hundreds of people already killed across Iran by shootings. And there is a real question mark looming over the future of the regime. That was one of the main issues which we talked with Netanyahu about and is obviously being followed very closely here in Israel as well.

[Jason]

What do you mean by that? What do Israelis or what do the Israeli leadership make of those protests?

[Anshel Pfeffer]

Well, the Israeli leadership is very concerned that this may also spiral out to an attack, perhaps even another war between Israel and Iran. We're just seven months after the 12 day war back in June between Israel and Iran. And in many ways this is connected to the protest. The protesters are there because of the economic situation and the lack of democracy in Iran. But a lot of observers who I've spoken to saying that something happened in June in this war which Israel achieved dominance of the skies over pretty quickly, and this may have in a way broken something of the barrier of fear that kept people from protesting against the regime.

[Jason]

And so now the Israelis are watching those protests quite closely.

[Anshel Pfeffer]

While obviously our main focus of intelligence services and governments around the world is on those protests taking place on the streets, the Israelis are looking at more remote places in Iran, the places where missile launchers are being prepared, and there are indications of preparations happening there.

[Jason]

So I'm still a little unclear on what the Israeli fears are here. Iran has its own problems at home. What's in it for them to sort of retaliate now about what happened in June?

[Anshel Pfeffer]

So there'll be a number of reasons why the Iranian regime may want to launch a strike right now. For a start, this perhaps could be something which would avert the attention or perhaps even rally the Iranian people around the regime. Another war with Israel. When you have problems at home, you cast around for an external enemy. There is also the fear of an Iranian miscalculation. The Iranians are themselves very much concerned that Israel will try again to strike their country and to destroy the remaining missile launchers, the remaining components of the nuclear program. And if they fear that that is something that is about to happen, they want to put in a preemptive strike first. And then there's the lingering frustrations of the Iranian regime from this war that they didn't succeed in stopping Israel from attacking their main strategic sites. They didn't really succeed in landing a serious blow in Israel despite firing over five. And therefore, there's expectations that at some point Iran will try to restore its own deterrence and restore its military pride. There's also a worry in Israel that if the United States, as Donald Trump has been threatening in recent days, does attack Iran, in some way, Trump has said that if Iran continues shooting at protesters, he will do something very painful to Iran. Then Iranians will have to retaliate to that. And the easiest way for them to retaliate would be hitting one of American's allies in the region. These are all reasons why Israel is concerned that this could actually be the moment when Iran, despite the regime being very much embattled now at home, may try to take an opportunity and attack abroad.

[Jason]

But what about the prospect of Israel using this opportunity, conversely, to finish the job? It started in June, for example?

[Anshel Pfeffer]

Well, we saw just two weeks ago when Netanyahu visited Trump at Mar? A Lago, that he was basically egging Trump on to support Israel. If such a strike was needed, Trump delivered on that. Now I hear that Iran is trying to build up again. And if they are, we're going to have to knock them down. Knock them down. We'll knock the hell out of them.

[Henry Tricks]

But hopefully that's not happening.

[Anshel Pfeffer]

So there is American backing for that. And we know that Israel does see this as something that will have to be done in the future. But the question really is the timing. And I don't think from what I've been hearing from Israeli sources that Israel is quite prepared now in the next days or weeks for such an attack, mainly because Israel is still replenishing its own missile defense and interceptors. I don't think they want to do it quite now. So it was interesting to note the differences between Netanyahu two weeks ago in Mar? A Lago and Netanyahu in our interview with him on Thursday.

[Jason]

Well, exactly that. What did Mr. Netanyahu say when you were sat down with him last week, specifically on this question about Iran?

[Anshel Pfeffer]

Well, anyone who's ever seen an Netanyahu interview or Netanyahu speech knows that he's very, very quick to get to Iran, and Iran is his main bugbear and has been for many years. And what was interesting in our interview with him on Thursday is that he didn't seem that eager to speak about Iran. He didn't bring it up. Zani and Ed brought it up. And when they asked him about Trump's recent statements about Iran, his threats to attack Iran if they do shoot at the protesters, interestingly, he didn't even endorse that strike.

[Carla Subidana]

Do you think that's a good idea? And do you think that there should be outside pressure now for regime change?

[Benjamin Netanyahu]

I think there is pressure. Everybody wants to see that. But I said, I was asked about that and I said, I'll tell You one definite time when we would resume our military activities. If Iran attacks us, which they might, then there will be horrible consequences for Iran. That's definite. Everything else, I think we should. We should see what is happening inside Iran.

[Anshel Pfeffer]

We've had this strange situation which Netanyahu for so many years has been urging American leaders to get tough on Iran. And now for the first time, we have the President of the United States saying much tougher things than Netanyahu himself is saying. Beyond that, he was almost reluctant to threaten Iran.

[Benjamin Netanyahu]

And it may be a moment where the people of Iran take charge of their own destiny. Revolutions are best done from within.

[Anshel Pfeffer]

In other words, perhaps America and perhaps other countries shouldn't be interfering right now. We should let things work themselves out in Iran. And this is something that I've spoken with Israeli officials in recent days, that the policy currently is to lower the Israeli profile and for it not to be seen as if Israel is in any way interfering in the internal issues within Iran.

[Jason]

So that would suggest that Mr. Netanyahu is trying to head off that miscalculation you were talking about before. If Iran feels less threatened, it is less likely to attempt what it thinks is a first strike.

[Anshel Pfeffer]

Yes. I mean, it's clear that Netanyahu hasn't abandoned his plans to destroy Iran's nuclear and missile programs. And he talked about the threat that they pose.

[Benjamin Netanyahu]

It's akin to somebody who has horrible cancer, the attempt to build atomic weapons, and the other is the attempt to build 20,000 ballistic missiles. So we had to take it out. But when you take out these lumps of cancer and certain types of lumps of cancer can reappear, if you don't take it out, you'll die.

[Anshel Pfeffer]

But right now, he wants whatever is happening in Iran, if it's mass protests, if it's perhaps even a regime change and revolution to play out before there is possibly another round of warfare between Israel and Iran.

[Jason]

So extremely uncertain, obviously, as you say. But how do you think Israel might hope it can turn the situation to its advantage?

[Anshel Pfeffer]

Well, there are three types of threats and also perhaps gains that Israel can have here. I think the most immediate concern is what we've mentioned already, the ballistic missiles. The nuclear program currently is dormant. The missiles that they've begun to rebuild, them, this is an immediate concern. If, for example, law and order breaks down in Iran or parts of Iran descend into anarchy, then what happens to these very dangerous weapons and this nuclear program? And this is also something that the regime perhaps could use in a deal with the American Americans to reduce the pressure. And we already saw last night that Donald Trump said that the Iranians have talked to him about reaching some kind of a deal. So these are assets that are in play. Then the next type of concern is Iran's regional network of proxies, which has been hit very hard by Israel in the last couple of years, but it's still there. And Iran, which will have to focus much more now inwards, both on trying to maintain order in Iran and on rebuilding the Iranian economy, simply won't have the money, all the attention span to continue building and maintaining this network. And that suddenly for Israel would be a major gain. And then there's, I think, the longer term issue, and that is where Iran fits in the region. Now if you go back before the Iranian Revolution in 1979, Iran was Israel's probably most important ally in the region. Two regional powers, non Arab. The Iranians aren't Arabs, obviously, and they had a very good relationship with Israel. Israel bought most of its oil from Iran up until the end of the 1970s. Iran put a lot of weapons and other types of technological know how from Israel. And all that ended in 1979 when Khomeini came to power with Islamic Republic. But you speak to a lot of people who were around in those days. They don't see a reason why that kind of alliance can't exist again. Now this is not something that's going to happen in days or weeks even if the regime does fall. But I think it is a long term eventuality that we can look towards certainly as the desired result for Israel.

[Jason]

Anshul, thanks very much for your time.

[Anshel Pfeffer]

Thanks ever for having me, Jason.

[Jason]

Our interview with Mr. Netanyahu covered lots of issues beyond Iran, including the aftermath of the war in Gaza, settlers expansion into the west bank, and the setting up of an inquiry into the October 7 Hamas attacks and the prime minister's own political future in an election year. Insider is on the Economist's website and app and available to full subscribers. If you're not one, you can sign up today and get 50% off a subscription. That offer ends soon. Click the link in the show Notes for more.

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[Benjamin Netanyahu]

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[Jason]

Think back to the technology that influenced your education, however far you decided to take it. Me, I didn't even have my own email address until late in my undergraduate years. Clearly, universal Internet access changed education forever. But then, perhaps an even more transformative tech Consider the class that will graduate from American universities in 2026. Just after they got to university in 2022 came an innovation that has changed the classroom and will change the job market.

[Henry Tricks]

America's class of 2026 will be the first members of the ChatGPT generation to graduate.

[Jason]

Henry Tricks is our US technology editor and has been writing about grads, jobs and AI for the Economist's World Ahead series.

[Henry Tricks]

Now, some of those will be AI pioneers who are highly adept at using generative AI and no doubt will be keenly sought after by employ. But for others, AI threatens something of a rude awakening as they enter the workforce.

[Jason]

So you think 2026 is going to be where AI essentially really makes itself felt in the workplace?

[Henry Tricks]

It's been a long time coming. There are forecasts that predict that by the end of 2026, as many as 40% of workplace applications will be done by AI agents working either alongside or replacing human workers. And if they do those jobs on our behalf, then the worries are that there will be less hiring, especially in white collar work and especially for young graduates.

[Jason]

And that has to some degree already started to bite, hasn't it?

[Henry Tricks]

There is some evidence that we're beginning to see the early stages of this, although the evidence is still quite slim. But there was a recent study by researchers at Stanford University who detected a decline in employment from 2022 until 2025 for particularly young people, 22 to 25 year olds working in very AI exposed industries such as software development and customer service. It's quite possible that other factors were involved. There was a lot of overhiring, especially in software development during the pandemic. But it's also possible that companies are kind of using AI as an excuse to curtail hiring. Or they're seeing the benefits of AI and basically realizing that they need fewer.

[Jason]

Workers, which at the bottom end of the of the skill set of the seniority makes a lot of sense, right? This is something that is coming for the new grads, for the young people, for the junior.

[Henry Tricks]

Yeah, it's unfortunate. And companies need young blood. Where you're not seeing the same effect is higher up in the workplace among the more senior workers. So for example, researchers found that headcount of junior employees in firms that were big adopters of AI had fallen since early 2023, but it hadn't fallen for higher ups. And what researchers are seeing there basically is not so much layoffs as a result of generative AI. What they're see a reduction in hiring.

[Jason]

So at the same time, this is changing hiring practices and I guess, job prospects for some people, it's changing companies themselves. Right.

[Henry Tricks]

If you think about the way that companies look now, they have a sort of pyramid structure with a lot of workers at the bottom gradually tapering towards very few leaders at the top. And the scenario under generative AI suggests that that structure, that shape, may start to change. What we're likely to see in the short term is what consultants call the diamond structure, which now means that you continue to have few people at the top. You have few people at the bottom, but you have a big rump of people in the middle. But there is a more hopeful, longer term alternative scenario, which is called the hourglass. The hope is here that young graduates who are actually AI natives start to prove to their bosses that actually they're really vital to have as workers, because they get it. They get how to use generative AI and they know how to bring productivity to the companies. And in that case, you get a different shape in which you get more workers at the bottom, and then you have fewer workers in the middle, because that's some of the work that the AI agents will do. And then you have the leaders at the top. This basically means that those workers who are fresh from college may be able to take advantage of AI and overtake those AI laggards in the middle.

[Jason]

So taking all that in, then, what would you suggest for new grads for people coming onto the job market in 2026?

[Henry Tricks]

I would say that if you are coming onto the job market in 2026, you've got two options. One of them is to double down on AI literacy. Get as much training as you can, as much practice as you can using the tools that are already available. And then the other one is basically to opt for jobs that are less vulnerable to disruption because of AI and hence easier to enter. And that might be manufacturing, it might be service towards human beings in the form of entertainment or cooking or all those sort of things. But I think that whatever option you choose as a graduate, you have to make the case to potential employers that it's really important to hire young talent, notwithstanding the rise of the agents. After all, young graduates can make the case that they are the first ones literally schooled on ChatGPT. And even if they aren't fans of AI. They can argue that if there are no employees brought into the firm at the bott and qualified to take over as boss's age, then the firm has no future.

[Jason]

Henry, thanks as always for joining us.

[Henry Tricks]

Jason, thank you for having me.

[Jason]

You remember what happened back in 2023 when President Emmanuel Macron suggested bumping up France's retirement age from 62 to 64. Fury, chaos, riots. It is a note notoriously sticky problem. Across Europe, playgrounds are emptying while care homes are filling up. And neither pensioners nor working folk want to be told that the payoff at the end is going to be trimmed. But trimming is going to be necessary in some places more than others.

[Carla Subidana]

In France, the average retiree now spends 23 years drawing a pension, which is longer than in any other OECD country. Spain and Italy are not far behind.

[Jason]

Carla Subidana is a news editor at the Economist.

[Carla Subidana]

And by contrast, in Denmark, pensioners draw a pension for 19 years on average, which is much lower. So basically we're seeing a divide in Europe in which some countries have low retirement ages while others are reforming faster and preparing for the coming demographic hit.

[Jason]

Well, let's start there with the demographic hit. What is that going to look like?

[Carla Subidana]

Europe is often referred to as the old continent, and for good reason. According to the European Commission, by 2070, there will be barely two working age adults on the continent for every person over 65, which is down from around three today. And that's a really big problem for countries with what we call unfunded pension systems. And in those systems, today's workers pay for today's retirees. So essentially what this means is that if there's a shrinking pool of contributors, pension generosity must inevitably fall. And then there are countries which have funded systems which are much better prepared for the hit, because in those systems, workers and employers pay into large collective pension funds which then invest the money and then the returns go towards paying for future pensions, which means that they're less reliant on current workers, so they will be less affected by a shrinking of the workforce. And the problem is that the countries with unfunded systems are the ones with the most generous pension systems, and so the ones who are finding it hard to reform, like France, Spain or Italy. And then to complicate matters even further, those countries are also aging the fastest. The European Commission says that the growing dependency of more elderly people and fewer workers will add almost 4 percentage points of GDP to state pension costs in Spain and around 3 in Portugal. By 2045. So this combination of factors means that basically those countries, normally southern countries, are really in a bind.

[Jason]

So there's sort of several conspiring factors here that people are living longer, taking care of them in their old age is getting more expensive while all of this is going on.

[Carla Subidana]

Yes. Making European pensions more affordable is becoming even more urgent because other aging related costs are rising fast. As societies age, countries are going to need to invest a lot in health care and care for the elderly. So, for example, the European Commission expects the cost of long term care to rise from 1.7% of Europe's GDP in 2022 to 2.6 by 2070. And that group of countries that I mentioned that are worse placed to cope also have weaker health and social systems than their northern counterparts, which means that they will need to invest a lot more. So, for example, in Spain, societies rely a lot on family members to care for the elderly. But as there's more elderly people and at the same time more women enter the workforce, who are the ones who usually do the care, governments are going to need to step up to fill that gap.

[Jason]

So it sounds as if broadly it's northern European countries that aren't going to be hit quite so hard here.

[Carla Subidana]

Yes. So a handful of northern countries, such as the Netherlands, Sweden, Denmark and Switzerland, are in a better position because of a combination of factors. First of all, they have funded pension systems, which, as I explained, means that they are less impacted by the fact that contributors are shrinking. And then those countries, countries are also aging less fast. They have more solid economic growth, and they are in a better fiscal position than their southern counterparts.

[Jason]

So how to make the numbers add up, though? It's obviously politically difficult for anyone to try to change what pensioners are going to get or when they're going to get it.

[Carla Subidana]

Yes. So there are no easy answers to this. You either make pensions less generous or you raise their retirement age. But governments are very scared of angering pensioners as they're a very important electoral force. So, sadly, I don't think we're going to see any big changes soon. And the plan to increase the retirement age didn't work. In France in October, Emmanuel Macron's prime minister had to shelve the measure basically to save his government. Other governments like Germany and Spain have faced similar challenges. And so by 2045, the biggest spenders will be France, Belgium, Norway and Austria. They will spend around 30% of GDP on aging related costs. So those are the countries that are going to be under most pressure to reform Norway is better placed because it has the world's biggest sovereign wealth fund, so it can afford to age more luxuriously. But the others are going to have to make some really tough decisions, and they should look to Denmark, which is the one who has made the most bold reforms. It plans to raise the retirement age from 67 to 70 by 2040, which would be the highest in Europe. But the rest are under a lot of pressure to reform.

[Jason]

Carla, thanks very much for your time.

[Carla Subidana]

Thank you, Jason.

[Jason]

That's all for this episode of THE intelligence. We'll see you back here tomorrow.

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