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Unemployment rates remain high amongst young people (credit: CMG Lee)

"Most of our people have never had it so good." That was the message of the Conservative Prime Minister, Harold Macmillan, in 1957 as postwar shortages had been overcome. Whatever the economic problems facing the nation, living standards were higher than ever and jobs were readily available. The same message could have been repeated by any of the subsequent prime ministers, except for during a few quarters of relatively mild dips in output and spending, until early 2008.

For young people in particular, the post-war era of never-ending economic growth justified optimism about the future. They could confidently expect to enjoy higher consumption than their parents. Further, the young could over their working lifetimes envisage greater prosperity and more leisure than the previous generation. New entrants to the workforce could take growth and improvement for granted, and improvement did indeed occur with every succeeding cohort of young people. 

Until early 2008. The Great Recession has knocked many assumptions, but it has knocked the assumptions of the young worst of all. National output has now returned to its previous peak, and pensioner incomes and living standards have suffered little damage. But since early 2008 people in their late teens or early twenties have seen a severe economic setback compared with their counterparts 15 or 20 years ago. The key numbers are set out in the Institute for Fiscal Studies's (IFS) 2014 report Living Standards, Poverty and Inequality in the UK: "Comparing 22- to 30-year-olds in 2012/13 with 22- to 30-year-olds in 2007/8, median household income fell by 20 per cent" after housing costs and in real terms. Older workers (in the 31-59 group) also saw drops in real incomes, but only     half as bad. Pensioners were even less affected.

A drop in incomes by a fifth may seem startling and implausible, but detailed evidence substantiates the IFS analysis. Car ownership among the young stopped rising about 20 years ago, but more recently it has gone into reverse. In the mid-1990s 80 per cent of men in the 21-29 age range had a full driving licence. The latest official figures, for 2012, show that the ratio had dropped to just over 66 per cent.

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