Trade wars, spring statement and intergenerational fairness
No images? Click here
Welcome to IF’s Spring Newsletter
Addressing the intergenerational divide
The Impact of trade wars on younger generations
Global trade tensions are rising, and tariffs will take a toll on economic growth. Higher costs, reduced business confidence, lower investment, and increased unemployment will further undermine the prospects of young people who already face a cost-of-living crisis. The younger generation faces fewer jobs, lower pay, and higher prices, making financial stability even harder to achieve.
Rising defence spending and its effect on young people
The government’s decision to increase defence spending will further squeeze day-to-day budgets, worsening intergenerational inequality. With limited fiscal flexibility, the Chancellor has already increased employers’ National Insurance, effectively a tax on youth employment. IF has already highlighted that aligning tax rates on earned and unearned income could generate £30 billion annually. Instead, non-statutory spending cuts may disproportionately impact younger generations.
The upcoming Spring Statement will shape government spending priorities. How will these decisions impact young people? Read IF’s latest article on intergenerational fairness here.
Triple lock pension policy: A generational burden
The government has confirmed that the triple lock on state pensions will remain unchanged. With pension costs projected to reach £140 billion in 2024/25 and growing, the triple lock alone could add £45 billion per year by 2050, according to the IFS. This policy benefits the wealthiest generation while limiting investments in younger generations, exacerbating intergenerational financial inequality.
1.5 million new homes: A step in the right direction
The government is pushing forward with its plan to deliver 1.5 million new homes, addressing the housing crisis for young people. The introduction of the Grey Belt classification and the return of strategic planning in the Planning and Infrastructure Bill could help increase housing supply. However, debate will be heated over proposed changes that may limit local opposition to new developments. IF supports reforms that prioritise affordable housing for young people.
Young savers: Will cash ISA limits remain?
Media speculation suggests that the £20,000 annual ISA investment limit will remain unchanged. IF emphasised that younger generations need flexible savings options to fund mortgage deposits, rental costs, and career development. Since ISA contributions are made post-tax, they do not impose upfront costs on the government.
Student debt crisis: Urgent reforms needed
The rising cost of living is making student poverty increase and graduate loan repayments increasingly burdensome. The government has extended loan terms for new students to 40 years while lowering the repayment threshold to £25,000. IF is calling for immediate changes, including:
- Increasing the student maintenance loan threshold (frozen since 2008)
- Restoring the real value of maintenance loans
- Reintroducing maintenance grants
- Lowering the 9% repayment rate
By 2025, many graduates earning minimum wage will still be required to repay loans, effectively imposing a higher tax burden on young workers.
Welfare spending cuts: Who will be affected?
With the triple lock protected, the government has announced it's intention to target working-age and child welfare for spending cuts. Long-term disability and mental health issues among young people are increasing, yet investment in early intervention remains inadequate. IF research suggests that investing in, rather than taking from, younger generations experiencing health and/or mental health hardship should be the way forward. In this analysis of just one mental health condition - depression - IF estimated that addressing depression earlier in life could recover £1.74 billion in lost tax contributions per cohort.
Falling birth rates and the future of the UK economy
Birth rates in just one area - Bristol - have declined by 30% since 2012, raising concerns about future workforce sustainability. The UK’s welfare system relies on a stable dependency ratio, yet the rising cost of living and housing is discouraging young families. A shrinking workforce could lead to long-term economic challenges and fewer skilled workers to meet housing and infrastructure demands in the future. Current governments should have an obligation to look to the future as much as deal with issues that affect generations today. That is why IF has long called for intergenerational impact assessments. More news on our pilot impact assessment work with local councils to come shortly.
Our latest research report explains that younger households have to spend much more on “essential” costs than older households. While younger household’s discretionary spending has fallen off a cliff, older household’s discretionary spending has actually increased. The idea that we’re all in this cost-of-living crisis together doesn’t stand up to scrutiny, largely due to the prohibitive cost of housing and rents which, is sucking money from young people's pockets.
We will use our research to identify those MPs in areas where the housing crisis is most acute and call on them to champion genuinely affordable, the safe and secure new homes that younger generations need.
If you want to catch up on our other recently published research on the housing crisis on a local authority level, taxation, why the government should promote trains over planes, the rapid ageing of the countryside, the lack of young people's savings or how intergenerational fairness should intersect with the net zero transition, go to our research pages on IF's website.
Huge thanks to Meera Meera Saravanan, our Royal Holloway politics student, on a one-day-a-week placement, charged with boosting IF's engagement with students and young people, who has come to the end of her time with IF.
If you would like to discuss a university student IF placement scheme, please email liz@if.org.uk.
IF works with organisations and businesses on research that is of mutual benefit. If you would like to discuss how to support our work and how our partnerships work please email liz@if.org.uk to set up an initial meeting.
Catch up on intergenerational fairness issues with our What IF? Podcast. It's already achieved more than 5,350 downloads and is in the Top 50 of podcasts. Available on Apple, Spotify, Chromecast, Goolge etc.
Are you under 35 and passionate about housing, pensions, taxation, climate change, government spending, or mental health? We need more young spokespeople to share their experiences with the media. If you’d like to get involved, email liz@if.org.uk for a confidential chat.
