This week the IMF cut its forecast for UK growth by a hefty 0.5 percentage points to 0.8% for 2026, the sharpest downgrade of any G7 economy. The OECD last week went lower still, to 0.7%, leaving the Office for Budget Responsibility’s forecast of 1.1% looking increasingly optimistic. Britain cannot afford to persist with an economic model and government policies that not only make home ownership harder for the young, but make it harder for them to move for better jobs, take entrepreneurial risks, start families and build the next wave of the country’s productive wealth.
In 2025 the median home in England cost £300,000, or 7.6 times the median annual earnings of a full-time employee – well above the ONS’s broad affordability benchmark of five times earnings. In 1997, the equivalent figure was around 3.5 times earnings. The latest FCA data shows that in the last quarter of 2025, nearly half of new mortgages were for more than 75% of the property’s value, and 8.3% were for more than 90%. No wonder then the mortgage market is also showing clear signs of stretched affordability under higher interest rates. That is not the mark of a healthy, wealth-owning democracy. Nor is home ownership recovering to anything like its old norm. According to Resolution Foundation research, just 31% of 25 to 34-year-olds owned their own home in 2022–23, down from 55% in 1990.
This is not just a social problem. Research published in July 2025 by Homes England found a statistically significant link between worsening affordability and weaker productivity in London and the Greater South East, with a 10% rise in housing costs relative to incomes associated with a 3.1% decline in productivity in its baseline model. Bottom line; when people cannot afford to live near the most productive jobs, the economy itself takes the hit.
Then there are student loans. In what looks suspiciously like gesture politics ahead of the May 7 local elections, the Government has capped interest rates on Plan 2 and Plan 3 loans at 6% for the 2026-27 academic year. Plan 2 borrowers repay 9% of earnings above £29,385, while postgraduate borrowers repay 6% above £21,000. Add in the 20% basic rate of income tax and the 8% employee National Insurance rate, and a graduate repaying both undergraduate and postgraduate loans can lose 43p in the pound on part of their earnings. That does not bode well for those looking to save, build a deposit for a home, or even believe that working harder will leave you materially better off.
The labour market too is offering less compensation for these burdens than it once did. ONS figures show vacancies at 721,000 in December 2025 to February 2026, down 9.5% on the year, while the unemployment-to-vacancy ratio rose to 2.6 in November 2025 to January 2026, up from 1.9 a year earlier. Among 16 to 24-year-olds, 12.8% were not in education, employment or training in late 2025, including 411,000 who were unemployed. And the graduate market is plainly under pressure. The Institute of Student Employers reported that graduate hiring fell by 8% in 2025. Adzuna’s latest labour-market report says graduate vacancies were down 45% year on year, the sharpest annual decline since November 2020. This is the opposite of what a country in need of faster growth should want.
Meanwhile, older cohorts remain relatively better protected. That is not an attack on pensioners, many of whom are far from wealthy, particularly outside the South East. It is simply an observation about the broad direction of policy. The state pension rose by 4.8% this month under the much-debated triple lock. At the same time, Resolution Foundation analysis shows that the wealth gap between people in their early 30s and those in their early 60s more than doubled between 2006–08 and 2020–22, rising from £135,000 to £310,000 in real terms. Britain has become much better at defending existing wealth than at enabling new wealth creation. That matters because a society in which ownership is increasingly inherited, delayed or denied is also a society that becomes less dynamic, less mobile and less economically confident.
The answer cannot simply be another tangle of tax breaks, youth subsidies, targeted reliefs and handouts. Britain has had too much of that sort of policy tinkering already. It adds nothing but unnecessary complexity, encourages lobbying and too often ends up inflating the price of the very things people are struggling to buy. If the problem is weak wealth formation and a disincentivised young generation, another gimmick from the Treasury is not the solution. The priority should be removing the structural barriers that make it harder for younger adults to own, save, move and invest in their future.
That means, first, building far more homes in the places where the economy is strongest. On this at least the direction is clear. The OBR estimated last year that planning reforms could deliver 170,000 additional homes and lift GDP by 0.2% by 2029-30.
Second, student finance needs simplifying and depoliticising. A system that quietly imposes punitive effective marginal rates on graduates is not pro-opportunity or pro-growth.
Third, policymakers need to stop piling tax, labour-cost and regulatory burdens onto early-career work and then expressing surprise when the transition into stable employment becomes slower and less secure.
Britain’s generational contract has not just frayed. It has quietly reversed. Younger people are expected to take on more debt, pay more for housing, face weaker entry-level job prospects and wait longer for the ordinary milestones of adult life. That would be troubling enough in a booming economy. In a country now forecast to grow by less than 1%, it amounts to economic self-harm. The point is not simply that the young are being treated unfairly, though many are. It is that they are being asked to carry the costs of a low-growth model that no longer works. If ministers are serious about growth, replacing the current broken system is where they should start.
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