> Britain is heading for a recession which will last until the end of 2023. The Bank of England has hiked interest rates to 1.75 per cent, their highest level since 2008, warning that consumer inflation could hit 13 per cent next year. But it’s becoming increasingly clear that not all people will experience this crisis equally.
> Some people are worrying about rising mortgage rates, sometimes for their second homes. Meanwhile, millions of renters are struggling to pay rising bills and rents. If the stories flooding my inbox are anything to go by, those rents are rising well above inflation, by 20 and sometimes 30 per cent, as landlords appear to be passing their cost of living concerns onto tenants.
> Once again, the dividing line is this: who has assets or access to wealth they can fall back on (whether that’s their own or their family’s) and who does not. Age is a factor here: while it’s true that older people, particularly pensioners on low incomes are struggling, according to the IFS, one in six 55 to 64 year olds own a second property. Meanwhile, young working adults born in the late 80s onwards are less likely to own a home than those born in the late 70s or early 80s.
> This wealth-based inequality should be a key issue for the Tory leadership contenders vying to be our next Prime Minister. Instead, talk of cutting taxes has dominated debates. And yet, according to the Institute for Fiscal Studies (IFS), nearly half of adults do not earn enough money to pay tax at all. Only 59 per cent (about three-fifths) of adults earn enough money to pay income tax in the first place. If there was ever a neat example of just how unhinged the Conservative Party’s leadership contest is from economic and social reality, this is it.
> Rachelle Earwaker is a senior economist at the Joseph Rowntree Foundation (JRF), an organisation which campaigns on poverty. She says that more help is needed for younger adults. “Our research has found that 18 to 34 year olds on low incomes are disproportionately affected by the cost of living crisis, with over six in 10 falling into arrears on their bills and over eight in 10 going without essentials,” she explains.
> Older people on low incomes are hard hit too. The JRF has found that working-age single-parent families will lose about a third (35 per cent) of their income to energy bills while pensioners on low incomes will pay out over a fifth (22 per cent) if they consume the same amount of energy in the coming year as they did in 2021/22.
> Neil Shearing is Group Chief Economist at Capital Economics. He and his colleagues were warning of a recession a month or so ago. It’s accepted that one is coming by the Bank of England – but those in Westminster don’t appear to have got the memo. Or, if they have, neither Conservative Party leadership candidates appear to have read it properly.
> “I don’t think that either of the Tory leadership candidates fully grasp the scale of the economic shock that’s coming down the track in the second half of this year, and the first quarter of next,” Shearing told me. “Particularly for people on lower and middle incomes. The squeezing of incomes through energy bills is vast, never mind other living costs… This is likely to intensify over coming quarters.”
> The cost of pretty much every essential – food, energy, housing – is rising in an economic crisis. It’s set to get worse. So where is the support?
> We don’t yet know whether the economic storm Britain has entered will be worse than 2008. But it certainly looks like it could last longer with ongoing issues around food and energy security likely to continue beyond a recession.
> This ought to ring alarm bells. Younger adults who, on balance, have had fewer opportunities to build wealth than older people will have less to fall back on as incomes are put under pressure. When I graduated from university in 2010, the Great Recession of 2007 to 2009 had just ended and it was impossible not to feel the ripple effects – a credit crunch, slimmed down graduate job schemes, a marked decline in real pay and high youth unemployment.
> Since then, aftershocks have continued. After a brief post-crash dip, house prices started to rise and rise beyond earnings (in no small part because investors flooded the market and bought up homes when prices dipped in 2008), pricing younger adults out of homeownership.
> While employment has risen considerably since 2007, real wages have stagnated, meaning
that the days of staying in a job and watching your earnings go up meaningfully every year are long gone for many. According to Shearing, “real pay has not grown over the past 10 or 15 years”.
> This is the second part of the story that’s being missed, says Shearing. “There is a possibility that homeowners with equity will be able to draw on that wealth to supplement their incomes while a renter who has less in savings won’t be able to do that.”
> However, Shearing expects house prices to fall and suspects we are “coming out of the period where ultra-low interest rates meant that those with assets, such as homes, did very well”.
> If house prices do drop, those with small or no mortgages will be somewhat shielded. There may be over one million older homeowners living in poverty but, according to The Centre for Ageing Better, the majority of them (755,000) own their homes outright, meaning they have no mortgage to pay, which means they would at least have an asset to sell – which is more than renters have.
> If he were advising either Sunak or Truss right now, Shearing says he would suggest the Government “let the market do its thing in terms of pushing up prices, but then compensate those on lower and middle incomes through government transfers”. This could work in a number of ways: you could give people money towards their energy bills via HMRC or make Universal Credit more generous for those relying on it. “You need quite a big support package in place to make that happen,” Shearing adds.
> Young adults know all too well that a recession can have a scarring effect on wages – they’ve been living with that for over a decade. They need to know what the plan is to make sure that work pays enough to live on and save to cushion them from financial precarity in the future. Right now, though, there’s just tumbleweed.
> Vicky Spratt is i’s Housing Correspondent
This is the Tory way.
Don’t vote Conservative.
Why would they ever help the young! They don’t vote conservative.
While they live in their pensioners parents home.
Nevermind the Tories, what comfort do Labour have to offer to the young renter in return for their vote?
One of the things I’ve always found problematic is that any help is based on income. If I bought a house 20/30 years ago my income goes a lot further than if I bought recently or I’m renting. Then you can add student loans and the like onto that.
The crisis will extend beyond just financial help. Ever since Brexit I’ve felt bummed out about the direction our country is headed, but a few months ago it *really* sunk into my head that we are in the bad times.
This has caused my anxiety to skyrocket, quite dramatically, amid concerns about how I and others will manage this period. I’m in my late twenties and I have none of the things I’m told hard work is supposed to bring my way. House? car? kids? forget it, it seems so out of reach and worse, out of my control.
Peoples mental health will hit rock bottom and we all know this country isn’t set up to deal with that adequately.
They did all the way back in 2010 when the triple lock was established. It is even more the case today.
Why help the people who statistics say are disengaged with politics and do t vote or don’t vote Tory?
So long as pensions come out in force during election time and vote Tory who cares about the younger generation…were so used to crisis after crisis and economic hardship it’s become the social norm
At some point, someone is going to have to draw a diagram in crayon for them showing the link between:
– Their elderly voter base shrinking
– Treating their replacements like shit
– Declining birthrates
Government only serves itself. Young people don’t have the time or resources to waste on going into politics.
Cohort politics
Can I say the property market is terrible for this I don’t know if discriminatory is the right word. Whenever I see a cheap basic home I think I can afford the details say “only accepting buyers over the age of 65 or on the brink of death”
Or going further stretching that definition of affordability only offers shared ownership properties. Like no I don’t want to take out a mortgage to share a property for well over 10 years. Hey son you inherit my house, well my 50% of 50% I’ve paid off.
Btw what can someone do with a shared ownership 1 bedroom flat?
This ladies and gentlemen, is the biggest reason I’ve decided to retreat into my own mind, it’s quick nice in there, got magic and stuff, not as much political intrigue
‘something something young people don’t vote’
I do. I have my whole life. Fuck knows why I bother though. We’re concentrated in cities where our impact is lowered by FPTP, and a lot of us move so frequently that missing an election by accident becomes easy. Ignoring the fact that both major parties plainly do nothing to entice our attention, and the last person who did was so unpalatable to the hordes of 40+ year olds that dominate our demography that they elected a fascist clown instead.
I just don’t know what to do anymore. We’re fucked.
This is yet another example of how to divide & conquer while looking like it’s bashing the Tories.
Pensioners with private retirement plans are well enough off.
If you worked for the civil service and got their pension you’re quids in.
But for the average pensioner & young person, you’re screwed.
All in same boat being screwed over & over again
The ELDERLY back the TORIES
Well yea they’re on holiday.
The government doesn’t even recognise someone’s right to live independently until age 35, of course tumbleweed.
I hate this sort of headline, another attempt to cause division. Both groups are going to struggle and are worthy of help.
Read the headline, thought, that’s interesting, I wonder if she stands-up the assertion in the headline.
> Age is a factor here: while it’s true that older people, particularly pensioners on low incomes are struggling, according to the IFS, one in six 55 to 64 year olds own a second property.
No – she doesn’t.
Course it does : pensioners vote , and more importantly they vote Tory . As a Gen X we’ve had boomers getting what they want at the expense of us our whole
Lives – it’s bled Into every successive generation.
Triple lock should apply to UC and minimum wage
100% govt backed mortgages are coming soon. That’s the only kind of help that this govt understand. Don’t worry that house is massively overpriced – we’ll enable you to take on the debt! It’ll be like Help to Buy on Steroids.
Some of these young politicians have a better understanding of life than older politicians they are stuck in the establishment all politicians should stand down after 10 years and that’s to long they get entrenched and do nothing except take their wages
And why does a billionaire need to be our prime minister WHY
I wouldn’t have been able to make it to college if it wasn’t for EMA (Education Maintainance Allowance). I started as it was introduced and not long after I left to university, the Conservatives revoked it.
So yeah, they do need help… I’m not even sure how younger students are supported any more!
Objectively, if you remove the boomer assumption that we’re all lazy transgender wimps, people in their 20’s are starting their careers 28K in debt and the cheapest ‘affordable housing’ is £140,000. How does one person earning 25K a year put a deposit down on a house like that?
In contrast, my parents had free university education and their first house was £10,000 (£31,000 adjusted for inflation). My uncle got his job as a policeman from calling a number on a bloody telephone pole. Nowadays you have to present 6 A-C GCSE’s, 3 A/B’s at A Level and a 2:1 Degree to work at Aldi. So no, we are not just lazy Starbucks drinkers. They are just a lot more hoops to jump through.
Of course young people need more money. But , as I get closer to retirement I begin to panic, because there is going to be no way I can improve my finances, ever. I will never be able to get a better job, or an extra job. I will never be able to save for emergencies, or look forward to things getting better. As I am when I retire, or worse, is how I will remain
30 comments
Article text by Vicky Spratt:
> Britain is heading for a recession which will last until the end of 2023. The Bank of England has hiked interest rates to 1.75 per cent, their highest level since 2008, warning that consumer inflation could hit 13 per cent next year. But it’s becoming increasingly clear that not all people will experience this crisis equally.
> Some people are worrying about rising mortgage rates, sometimes for their second homes. Meanwhile, millions of renters are struggling to pay rising bills and rents. If the stories flooding my inbox are anything to go by, those rents are rising well above inflation, by 20 and sometimes 30 per cent, as landlords appear to be passing their cost of living concerns onto tenants.
> Once again, the dividing line is this: who has assets or access to wealth they can fall back on (whether that’s their own or their family’s) and who does not. Age is a factor here: while it’s true that older people, particularly pensioners on low incomes are struggling, according to the IFS, one in six 55 to 64 year olds own a second property. Meanwhile, young working adults born in the late 80s onwards are less likely to own a home than those born in the late 70s or early 80s.
> This wealth-based inequality should be a key issue for the Tory leadership contenders vying to be our next Prime Minister. Instead, talk of cutting taxes has dominated debates. And yet, according to the Institute for Fiscal Studies (IFS), nearly half of adults do not earn enough money to pay tax at all. Only 59 per cent (about three-fifths) of adults earn enough money to pay income tax in the first place. If there was ever a neat example of just how unhinged the Conservative Party’s leadership contest is from economic and social reality, this is it.
> Rachelle Earwaker is a senior economist at the Joseph Rowntree Foundation (JRF), an organisation which campaigns on poverty. She says that more help is needed for younger adults. “Our research has found that 18 to 34 year olds on low incomes are disproportionately affected by the cost of living crisis, with over six in 10 falling into arrears on their bills and over eight in 10 going without essentials,” she explains.
> Older people on low incomes are hard hit too. The JRF has found that working-age single-parent families will lose about a third (35 per cent) of their income to energy bills while pensioners on low incomes will pay out over a fifth (22 per cent) if they consume the same amount of energy in the coming year as they did in 2021/22.
> Neil Shearing is Group Chief Economist at Capital Economics. He and his colleagues were warning of a recession a month or so ago. It’s accepted that one is coming by the Bank of England – but those in Westminster don’t appear to have got the memo. Or, if they have, neither Conservative Party leadership candidates appear to have read it properly.
> “I don’t think that either of the Tory leadership candidates fully grasp the scale of the economic shock that’s coming down the track in the second half of this year, and the first quarter of next,” Shearing told me. “Particularly for people on lower and middle incomes. The squeezing of incomes through energy bills is vast, never mind other living costs… This is likely to intensify over coming quarters.”
> The cost of pretty much every essential – food, energy, housing – is rising in an economic crisis. It’s set to get worse. So where is the support?
> We don’t yet know whether the economic storm Britain has entered will be worse than 2008. But it certainly looks like it could last longer with ongoing issues around food and energy security likely to continue beyond a recession.
> This ought to ring alarm bells. Younger adults who, on balance, have had fewer opportunities to build wealth than older people will have less to fall back on as incomes are put under pressure. When I graduated from university in 2010, the Great Recession of 2007 to 2009 had just ended and it was impossible not to feel the ripple effects – a credit crunch, slimmed down graduate job schemes, a marked decline in real pay and high youth unemployment.
> Since then, aftershocks have continued. After a brief post-crash dip, house prices started to rise and rise beyond earnings (in no small part because investors flooded the market and bought up homes when prices dipped in 2008), pricing younger adults out of homeownership.
> While employment has risen considerably since 2007, real wages have stagnated, meaning
that the days of staying in a job and watching your earnings go up meaningfully every year are long gone for many. According to Shearing, “real pay has not grown over the past 10 or 15 years”.
> This is the second part of the story that’s being missed, says Shearing. “There is a possibility that homeowners with equity will be able to draw on that wealth to supplement their incomes while a renter who has less in savings won’t be able to do that.”
> However, Shearing expects house prices to fall and suspects we are “coming out of the period where ultra-low interest rates meant that those with assets, such as homes, did very well”.
> If house prices do drop, those with small or no mortgages will be somewhat shielded. There may be over one million older homeowners living in poverty but, according to The Centre for Ageing Better, the majority of them (755,000) own their homes outright, meaning they have no mortgage to pay, which means they would at least have an asset to sell – which is more than renters have.
> If he were advising either Sunak or Truss right now, Shearing says he would suggest the Government “let the market do its thing in terms of pushing up prices, but then compensate those on lower and middle incomes through government transfers”. This could work in a number of ways: you could give people money towards their energy bills via HMRC or make Universal Credit more generous for those relying on it. “You need quite a big support package in place to make that happen,” Shearing adds.
> Young adults know all too well that a recession can have a scarring effect on wages – they’ve been living with that for over a decade. They need to know what the plan is to make sure that work pays enough to live on and save to cushion them from financial precarity in the future. Right now, though, there’s just tumbleweed.
> Vicky Spratt is i’s Housing Correspondent
This is the Tory way.
Don’t vote Conservative.
Why would they ever help the young! They don’t vote conservative.
While they live in their pensioners parents home.
Nevermind the Tories, what comfort do Labour have to offer to the young renter in return for their vote?
One of the things I’ve always found problematic is that any help is based on income. If I bought a house 20/30 years ago my income goes a lot further than if I bought recently or I’m renting. Then you can add student loans and the like onto that.
The crisis will extend beyond just financial help. Ever since Brexit I’ve felt bummed out about the direction our country is headed, but a few months ago it *really* sunk into my head that we are in the bad times.
This has caused my anxiety to skyrocket, quite dramatically, amid concerns about how I and others will manage this period. I’m in my late twenties and I have none of the things I’m told hard work is supposed to bring my way. House? car? kids? forget it, it seems so out of reach and worse, out of my control.
Peoples mental health will hit rock bottom and we all know this country isn’t set up to deal with that adequately.
They did all the way back in 2010 when the triple lock was established. It is even more the case today.
Why help the people who statistics say are disengaged with politics and do t vote or don’t vote Tory?
So long as pensions come out in force during election time and vote Tory who cares about the younger generation…were so used to crisis after crisis and economic hardship it’s become the social norm
At some point, someone is going to have to draw a diagram in crayon for them showing the link between:
– Their elderly voter base shrinking
– Treating their replacements like shit
– Declining birthrates
Government only serves itself. Young people don’t have the time or resources to waste on going into politics.
Cohort politics
Can I say the property market is terrible for this I don’t know if discriminatory is the right word. Whenever I see a cheap basic home I think I can afford the details say “only accepting buyers over the age of 65 or on the brink of death”
Or going further stretching that definition of affordability only offers shared ownership properties. Like no I don’t want to take out a mortgage to share a property for well over 10 years. Hey son you inherit my house, well my 50% of 50% I’ve paid off.
Btw what can someone do with a shared ownership 1 bedroom flat?
This ladies and gentlemen, is the biggest reason I’ve decided to retreat into my own mind, it’s quick nice in there, got magic and stuff, not as much political intrigue
‘something something young people don’t vote’
I do. I have my whole life. Fuck knows why I bother though. We’re concentrated in cities where our impact is lowered by FPTP, and a lot of us move so frequently that missing an election by accident becomes easy. Ignoring the fact that both major parties plainly do nothing to entice our attention, and the last person who did was so unpalatable to the hordes of 40+ year olds that dominate our demography that they elected a fascist clown instead.
I just don’t know what to do anymore. We’re fucked.
This is yet another example of how to divide & conquer while looking like it’s bashing the Tories.
Pensioners with private retirement plans are well enough off.
If you worked for the civil service and got their pension you’re quids in.
But for the average pensioner & young person, you’re screwed.
All in same boat being screwed over & over again
The ELDERLY back the TORIES
Well yea they’re on holiday.
The government doesn’t even recognise someone’s right to live independently until age 35, of course tumbleweed.
I hate this sort of headline, another attempt to cause division. Both groups are going to struggle and are worthy of help.
Read the headline, thought, that’s interesting, I wonder if she stands-up the assertion in the headline.
> Age is a factor here: while it’s true that older people, particularly pensioners on low incomes are struggling, according to the IFS, one in six 55 to 64 year olds own a second property.
No – she doesn’t.
Course it does : pensioners vote , and more importantly they vote Tory . As a Gen X we’ve had boomers getting what they want at the expense of us our whole
Lives – it’s bled Into every successive generation.
Triple lock should apply to UC and minimum wage
100% govt backed mortgages are coming soon. That’s the only kind of help that this govt understand. Don’t worry that house is massively overpriced – we’ll enable you to take on the debt! It’ll be like Help to Buy on Steroids.
Some of these young politicians have a better understanding of life than older politicians they are stuck in the establishment all politicians should stand down after 10 years and that’s to long they get entrenched and do nothing except take their wages
And why does a billionaire need to be our prime minister WHY
I wouldn’t have been able to make it to college if it wasn’t for EMA (Education Maintainance Allowance). I started as it was introduced and not long after I left to university, the Conservatives revoked it.
So yeah, they do need help… I’m not even sure how younger students are supported any more!
Objectively, if you remove the boomer assumption that we’re all lazy transgender wimps, people in their 20’s are starting their careers 28K in debt and the cheapest ‘affordable housing’ is £140,000. How does one person earning 25K a year put a deposit down on a house like that?
In contrast, my parents had free university education and their first house was £10,000 (£31,000 adjusted for inflation). My uncle got his job as a policeman from calling a number on a bloody telephone pole. Nowadays you have to present 6 A-C GCSE’s, 3 A/B’s at A Level and a 2:1 Degree to work at Aldi. So no, we are not just lazy Starbucks drinkers. They are just a lot more hoops to jump through.
Of course young people need more money. But , as I get closer to retirement I begin to panic, because there is going to be no way I can improve my finances, ever. I will never be able to get a better job, or an extra job. I will never be able to save for emergencies, or look forward to things getting better. As I am when I retire, or worse, is how I will remain
The Young don’t vote Tory. So there’s no need.