Experts warn next generation will be worse off
The Financial Times carried out a study and found that the increase in the standard of living has now levelled off and many of the financial advantages can now no longer be found.
The research revealed that for the first time in half a century, children will not exceed their parents’ financial achievement and are unlikely to see a wide-scale improvement in their lifestyle.
Part of the reason is that older generations have had the opportunity to benefit from free or cheap services and facilities no longer available. Free university education, dirt cheap housing and good pension schemes are all benefits which those born before 1960 are more likely to have enjoyed, compared to their offspring. And older Brits who are now pensioners have additional benefits, such as free bus passes and help with the costs of heating their home in the winter.
Conversely, the younger generation have had to pay increasingly high costs for a place to live and those who choose to go to university now largely have to fund it themselves. Added to stagnant wages, changes to pension schemes and planned cuts to both tax credits and child benefit means a far tougher financial outlook for those in their 20s.
The study from the Financial Times used information from 1961 to 2010, collected from the UK Data Archive, a total of more than 730,000 households and compared the living standards over the 20th century. Analysts found that,almost without exception, living standards for the next generation exceeded those of their parents. However, the trend ceased around 2000, which saw baby boomers eclipsing their younger counterparts for the first time.
Researchers also worked out that when inflated housing costs are considered, the standard of living dropped to less than that enjoyed by people in the 70s and 80s.
And experts have predicted that the gap between generations’ wealth is set to widen further, leading an increasing number of children dependent on their parents for financial help. This change would put the UK on a par with continental countries, such as Spain and Greece, where far less social mobility is the norm. The government has restricted the amount older generations have been hit by austerity measures and are expected to continue to do so, despite the increasing need to slash the country’s public debt.
Figures due out in the next few days are expected to confirm that the standard of living is continuing to be hit by the credit crunch.
Although inflation has finally started to tumble down from its peak of 5.2% last year, it is still expected to be around 3.3% when the latest results are announced on Tuesday. This means that prices are still continuing to rise faster than income, meaning that the nation is continuing to experience a collective pay cut. The average pay rise for a British worker, excluding bonuses, is currently around 1.7%.
A yearly survey is also due to release its results this week, comparing working hours and earnings for the past year. Experts have said that once the impact of inflation is taken into account, it is more or less certain that Britain will have experienced the second consecutive year of a drop in living standards. There has not been three successive years of a fall in living standards since before World War II.
Experts are in general agreement that the report will confirm that the country has suffered a further drop in the standard of living, once the report is released.