Inheritance remains the key
Research from the Institute for Fiscal Studies confirms the trend that continued increases in the standard of living – a feature of post-war economic expansion, are being reversed. (http://www.ifs.org.uk/publications/7017)
It’s now widely accepted that young people will be worse off than their parents generation and that many risk downwards social mobility as a result of changes in the labour market and to the occupational structure; but the IFS evidence now shows that those born in the 60s and 70s are equally likely to be no better off in retirement than their predecessors.
For example, individuals born in the 1970s are taking longer to get on the housing ladder as home ownership rates have stalled over the last few years at around two –thirds of the population, while the ending of many final salary pension schemes has also played a contributing role.
The IFS argue that the main determinant of an individual’s future prosperity will be inheritance. But as it also notes, inheritance is ‘unevenly distributed’. Years of inflated housing assets mean that many young people, despite being seriously disadvantaged in the labour market will enjoy some sort of inheritance in the future. Some will also benefit from the increasing number of schemes that now allow the equity acquired on an existing property to be transferred to another; but on the other hand, many will not. The IFS research reminds us that when we compare generational differences we also need to continue to recognise differences in class and inequality.