The boomer generation has hit the economic jackpot. Young people will inherit their massive debts

Young people in Britain could be forgiven for despairing at the financial pressures they face – and for feeling that previous generations enjoyed a much fairer economic environment. Then, just to add to their worries about home ownership and a poor job market, comes the grim announcement that the UK’s public debt is now 100% of GDP.

This debt burden will have to be borne by taxpayers for decades to come. Interest payments – just interest – on the country’s debt currently represent around 7.3% of public spending. That is more than is spent on defense (4.8%) or transport (3.8%).

And while some of what’s left will go towards future essential public services, it will also go towards solving problems caused by a historic lack of public investment (less money being spent by previous generations) in water , railways and other crucial infrastructure.

In fact, in the 1980s, much of this infrastructure was used by the UK government to finance itself, with assets including British Gas sold at a bargain price. Those baby boomers and older generations who could afford to buy stocks often made a decent profit.

There are other kinds of costs that today’s younger generations have had to bear as well. During the COVID lockdowns, universities and schools were closed as young people were forced to stay at home, mainly to protect the elderly. They lost their freedom to live and work in the EU after 60% of pensioners voted for Brexit, while the majority of young people voted against. Leaving Europe also made the UK less wealthy.

But not all are poorer. Over the past 20 years, the average income of retirees has increased by more than 50% on average, while that of working-age adults has increased by less than 10%. The median income of retired households is now higher after housing costs than that of households with children.

Most of the country’s wealth is now in the hands of the elderly. In 2018, one in four people aged over 65 lived in a household with a total wealth of more than £1 million. The poverty rates of pensioners are now lower than those of the rest of the population.

However, pensioners enjoy all kinds of discounts and unconditional benefits, such as free or reduced public transport. Their income is exempt from National Insurance contributions and there is a triple lock on the state pension, which is guaranteed to grow faster than work income.

Until recently, Winter Fuel Allowance meant that anyone born in 1944 or before received £300 (reduced to £200 for younger pensioners).

Boomer and bust?

While there is mild popular support for limiting the fuel allowance to poorer pensioners, the issue of getting money back from older people remains highly sensitive. (In 2017, then-prime minister Theresa May had to backtrack quickly when she suggested using pensioners’ wealth to fund the rising cost of care.)

One reason for this reluctance to grant money from the elderly may be that while most retirees are better off (compared to the working population), this is not the case for the poorest. Also, some retirees do not claim the benefits they are entitled to, and the last thing a civilized society wants is to let its elders freeze.

But the apparent economic divide raises a broader question about intergenerational justice. What does one generation owe to succeeding generations?

And it’s not just about the money. Global warming is another thing that older people haven’t spent most of their lives paying for, with the burden of repairing environmental damage once again falling largely on young people.

Perhaps a correct philosophical approach would be that it is okay to let some costs be paid in the future if the next generation can generally expect to live longer and be in better health with more options and comfort for consumers and an improved quality of life.

But that doesn’t seem to be the expectation right now. Incomes stagnated, as did life expectancy, while housing prices were not that expensive relative to 19th century incomes.

In this regard, many people, however old they may be, would probably sympathize with today’s youth. And they might even argue that it’s time for the government to focus on policies that explicitly benefit young people – such as building houses, different forms of taxation or subjecting pension income to national insurance.

There could also be a change in fiscal rules to allow greater investment in national infrastructure, higher taxes on fossil fuels to pay for the energy transition, or a more equal sharing of the costs of financing higher education among all graduates, regardless from the moment they received their degree.

Such changes would provide a dramatic shift toward an economic system that seeks to redistribute wealth not just among citizens, but across generations.