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In: Council of Europe. Proceedings of the European Population Conference 1982 (Strasbourg, 21-24 September 1982). Strasbourg, France, Council of Europe, 1983. 291-313.The possible drawbacks and adverse effects of the current population trend of the fall in fertility and steady aging of the population were analyzed. Areas in which links may exist between the economy and population trends, which, in a European context, appeared most pertinent were chosen. It is generally considered that a reduction in the number of births well result in a reduction in certain areas of public expenditure. Thus, the "numbers" effect would appear to be favorable as far as public finance is concerned. Reduction in education expenditure could offset the increase in health expenditure. The education sector is rapidly affected by a decline in the number of births, and the impact of demographic fluctutations is felt for many years as the cohorts grow older. Germany, where the birth rate has fallen markedly, provides valuable information about what can happen in such a case and illustrates the need to adapt education facilities. Focus is on the number of pupils, demand for teachers it is possible that education costs may be somewhat reduced, health costs and social security contributions will definitely increase. The relationship between health expenditures and age can be depicted by means of a U-shaped curve. The largest consumers of medical care and advice are children under the age of 1 year and adults over the age of 65. A sudden fall in the birth rate may reduce health expenditure, but since the aging of the population continues inexorably, what is saved on the youngest will be used to care for the oldest. The underlying tendency imposed by the changes in the structure of population until the end of the century will be to reinforce the upward trend in expenditure. Social security expenditure clearly will be much more strongly affected by demographic trends than other forms of expenditure. There is no demographic reason why overall household consumption should fall since, assuming that there are no economic fluctuations, per capita income is likely to increase. With a declining population growth, the building of housing to meet demographic needs will also diminish. Since such facilities as schools, hospitals, housing, and transport, are generally planned from a longterm standpoint, decisions to build may be delayed, possibly indefinitely, because of variations in population size. If present demographic conditions persist, all regions should, in the long run and to varying degrees, experience population decline. The demographic conditions in which Europe is going to live will not necessarily damage production capacity, but they will make it more difficult to develope and adapt that capacity.