“In an inaugural national audit of intergenerational spending power, which is likely to reignite tensions between young and old, the Resolution Foundation thinktank concludes that today’s 18- to 29-year-olds are also spending less on shoes and clothes, hobbies and travel in real terms than those at the same age in 2001 as housing costs have soared. Compared with people the same age at the turn of the millennium they are 7% poorer in real terms, after paying rent, or if they can afford it, mortgage dues.
Meanwhile, in a story that will be familiar to the rising millions of twentysomethings who can’t afford to move out from their parents home, baby boomers have cranked up their spending on fun, laying out more on recreation, restaurants, hotels and culture, as people aged 65 and over have enjoyed a steep 37% rise in spending power compared with the same generation in 2001.
The audit is published by the Resolution Foundation’s new Intergenerational Centre, which is led by the former science minister David Willetts, and it said the findings debunked “the idea that young people are devoting growing pots [of money] to eating in restaurants and cafés (be that those that serve avocado on toast or others) or flying abroad”.
The proportion the young spent on fuel and groceries was up two percentage points while their spending on recreation and culture was down two points, the share spend on restaurants and hotels was down one point and clothing and shoes down two points. The 65s and over spent three percentage points less on groceries, two percentage points more on restaurants and hotels and three percentage points more on recreation and culture.
“The clear picture in terms of day-to-day living standards as measured through household consumption is of generational progress for older generations, and generational decline for younger ones,” the report said.
A spokesman for Generation Rent, which represents young people who have been priced out of homeownership, said in response to the report that “resentment is growing” and the founder of the Intergenerational Foundation, which promotes the interests of younger generations, accused older people of “breaking the social contract”.
Far from wasting potential housing deposits on fripperies, as suggested in 2017 by one millionaire property developer, millennials have been obliged to allocate a greater proportion of any money left over after housing costs to groceries, utilities and education. In 2018 they spent £380 a week on non-housing items on average – 7% less in real terms than they would have done at the turn of the century, analysis of official figures showed. At the same time the spending of people aged 50-64 rose 11% to £460, and pensioner spending rose to £390 a week.
The audit also assesses sharp increases in housing costs, cuts to in-work benefits, stagnant pay since the financial 2008 financial crisis and widening gaps in absolute wealth between young and old as key factors in one of the biggest social changes of this era.
Half a million more twentysomethings are living at home than would have been the case if the pre-crisis trend had not been disrupted, the report found. In 2007, half of 21- to 24-year-olds lived with their parents but by 2018 this had risen to 60%. The increase for those in their late twenties was even greater, up a third from 24% to 32%. …”