He noted that energy and inflationary pressures, geopolitical instability and conflicts in Ukraine and the Gulf region are intensifying social tensions, but are not their root cause. In his view, they expose a deeper crisis of public trust in institutions.
The post-war social contract was based on the expectation that each generation would fund the protection of the one before it, confident that the next generation would do the same. But low birth rates and rising life expectancy are upsetting that balance. At the start of the century, people aged over 65 accounted for 16% of the EU population; today, the figure has risen to 22%.
Mr Karavias said the risk was not only fiscal but also social, as younger generations may question whether the system still includes them. Policies to support families are necessary, but cannot reverse demographic trends quickly: even a rise in births would not increase the workforce for around two decades.
The two pillars of the economic response
According to Eurobank’s chief executive, the strongest economic response to demographic pressures rests on two pillars: fiscal prudence and higher productivity.
He stressed that fiscal discipline also has a social dimension, as no additional debt should be passed on to future generations. He also called unproductive a public debate focused solely on how existing wealth should be distributed, without proposals for expanding it.
The second pillar is productivity, enabling fewer workers to produce more wealth. This, he said, requires more and better-quality investment in technology, infrastructure, energy, education and skills, as well as a state that facilitates business activity through faster procedures, stable rules and an effective justice system.
In this context, he referred to the Draghi report, noting that its proposals had not been acted on to the extent they should have been. In Greece, he said, investment is expected to approach 18.7% of GDP, up from just 11% in 2019, while foreign direct investment exceeded €12.5 billion in 2025, equivalent to 5% of GDP.
He stressed, however, that a significant share of this capital should go towards new productive activities with high productivity and added value.
The role of banks and pension-system changes
He placed particular emphasis on the importance of a sound, effective and profitable banking system in financing investment. As he said, the Greek economy could not be where it is today if the banks had not escaped the vicious cycle of the crisis.
He expressed satisfaction with Eurobank’s pioneering role in the decisions and initiatives that led to the normalisation and growth of the Greek banking system, noting that Greek banks are now able to finance investments of any size while properly assessing credit risk.
At the same time, he warned that even with higher productivity, Europe would need to make difficult decisions about the retirement age, the evolution of benefits and the balance between public and private funding.
In this context, he described the development of Occupational Pension Funds (TEA) and Group Employee Insurance Programmes (ΟΑΠΕΣ) as positive, supported by tax incentives so that retirement provision does not depend exclusively on the public pillar. The introduction of a state individual investment account for children, known as the “New Generation Piggy Bank”, is also moving in this direction, he said.
In conclusion, Mr Karavias stressed that Europe faces a choice: renew its social contract in good time and in an orderly way, or allow existing imbalances to force abrupt changes later. For Greece, he said, its positive divergence from the rest of Europe in the current climate represents an opportunity to attract more investment and keep the economy on a path of recovery, convergence and sustained improvement.