The Lasting Impact of the 2008 Financial Crisis on UK Millennials

The 2008 financial crisis has left a lasting impact on the economic well-being of UK millennials. A recent study has revealed that those in their early 30s have faced significant setbacks in terms of pay progress, with their incomes lower than those of the previous generation before the crisis. In contrast, millennials in the US have seen improvements in their living standards, with higher household incomes and better income growth.

The Resolution Foundation think tank highlighted that UK millennials born in the late 1980s and early 1990s are still earning no more than those born in the 1970s did at the same age. This has resulted in over two decades’ worth of lost progress on pay for the younger generation. On the other hand, disposable incomes of US millennials in their early 30s were 21% higher in 2021 than their predecessors had at the same age in 2007.

The study also pointed out that the slower income progress for young people in the UK is attributed to a ‘more sluggish’ economic growth, leading to lower overall income growth. In contrast, the age profile of income growth favoured millennials in the US, with incomes of those under 40 growing faster than average.

Sophie Hale, principal economist at the Resolution Foundation, emphasised the need for policy decisions to work for younger generations, addressing the imbalance in income and wealth growth that has disproportionately benefited older generations. She highlighted the challenges faced by UK millennials, including lower disposable incomes, reduced homeownership, and the reliance on high-cost and low-security private rented accommodation.

The report concluded that UK millennials have experienced considerably less progress than their US counterparts, primarily due to the stagnant UK economy and the limited prospects for pay and income progression. The study’s findings underscore the importance of restarting meaningful growth in the UK and ensuring that policy decisions take into account the needs of younger generations.

In summary, the economic scars of the 2008 financial crisis continue to impact the lives of UK millennials, while their American counterparts have seen improvements in their living standards. The study calls for a renewed focus on policies that promote income and wealth growth for younger generations, aiming to bridge the generational gaps and uphold the promise of intergenerational fairness.