Millennials have been burdened with “apocalyptic” levels of debt due to government overspending and could be the first generation to have a lower quality of life than their parents, a report published on Wednesday warns.
The research, “Who Will Care for Generation Y?” was carried out by Thatcherite think tank the Center for Policy Studies (CPS).
It accused so-called “baby boomers” – those born in the decades following WWII – of making unfinanced promises on benefits and pensions and leaving millennials – those born between 1980 and 2000 – to pick up the bill.
The CPS said Britain’s liabilities amount to £6 trillion, or £221,000 per household, as politicians continue to fawn over baby-boomers and older pensioners who are more likely to vote.
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It warned a combination of unaffordable housing, less than adequate pensions, rising university debts, and a “rapidly retreating state pension age” mean these millennials face “a quality of life below that of their parents.”
The think tank’s report focused on the Treasury’s Whole of Government Accounts (WGA), which include many of the unfinanced pledges or liabilities baby boomers have made in recent years.
It noted Britain’s state pension is not accounted for in the WGA, despite being the UK’s most substantial unfunded liability.This absence is ironic and troubling given that the HM Treasury has billed these accounts as transparent, it argued.
Michael Johnson, a leading CPS analyst who worked on the report, said baby boomers are skilled at creating inter-generational injustice. He argued this occurs when they make “vast unfunded promises” to themselves, most notably “in respect of pensions.”
Johnson said the scale of these unfunded liabilities is so great that Britain would be bankrupt if it were accounted for as “a public company.”
“The gap between the nation’s assets and liabilities grew by an unsustainable 51 percent in the five years to end-March 2014, to £1,852 billion,” he added.
“At 111 percent of GDP, this is equivalent to £70,000 per household – if the state pension, the largest of all unfunded liabilities (roughly £4,000 billion) is included the burden per household rises to £221,000.”
Johnson hinted baby boomers should rein back on unfinanced promises. He said such a move can only be achieved if they stop making these pledges or take steps to “fund them now.”
Johnson stressed funding these liabilities can only be achieved by higher levels of taxation or “further cuts.”
Speaking to RT on Wednesday, left-of-center economist and anti-austerity campaigner Michael Burke said the CPS’s report was a means of justifying further cuts.
“The timing of the report, in the run-up to Osborne's ‘emergency Budget’ where he will begin to implement austerity mark II is probably not a coincidence,” he said.
Burke acknowledged Britain faces a fiscal emergency. However, he argued it differs from the one suggested by Chancellor George Osborne or the CPS.
“The deficit and the accumulation of debt are a product of weak growth and zero improvement in productivity,” he said.
“This is because the private sector is unwilling to invest and the public sector, through cuts, has joined them.”
Burke said the only path to a brighter future for 16-35 year olds is “public investment.”
“Without that, they are condemned to have a worse standard of living than their parents,” he added.
Angus Hanton of the Intergenerational Foundation told RT the CPS study confirms that Britain’s younger generation will be heavily burdened with debt.
“The debts are like an iceberg – with the official government debt in view. But below the surface is a pension debt and set of hidden liabilities which are many times bigger,” he said.
Hanton said short-termism and selfishness are the root cause of the problem. He argued Britain’s “older generations and their politicians” have failed to heed the needs of younger generations.
“This is a worldwide problem caused by increases in life expectancies and a refusal by policymakers to think through the consequences,” he said.
Hanton said “more systemic measures” than welfare cuts are needed to protect the interests of young people.
“One radical measure that would help would be to review the state pension so that it is only available to those who need is, as the Australians have done,” he added.
Hanton stressed there are over 2 million over 60s in Britain living in homes with assets topping a million pounds.
He said millennials are “fed up” of the state paying out to all older people as if they were poor.