Britain’s intergenerational compact is at risk. That is the central finding of a new report published today by Dods Research, which concludes that on almost every metric — student finance, labour market outcomes, housing, and long-term savings — the outlook for Generation Z is set to be worse than that of their parents and grandparents.
A Lost Generation: Do Gen Z Have It Worse Than Their Parents?, authored by Jamie Selig, Senior Political Consultant for the Economy and Financial Services, finds that over decades, the UK has undergone a sustained shift in risk and wealth from young to old. The consequence is delayed asset accumulation, an insecure future, and growing intergenerational disparities. Gen Z face structural barriers across four interconnected domains — and each compounds the others.
The report calls for embedding generational analysis into policymaking, alongside targeted reforms to student finance, housing support, and long-term savings, aimed at improving asset accumulation and long-term financial security.
The analysis draws on original interviews with senior political figures and experts, including the co-political architects of the student finance system, Sir Vince Cable and Lord Willetts, both of whom recognise that the current model is generating economic distortions and outcomes it was not designed to produce.
The report finds that:
- The challenge facing Gen Z is not the result of any single policy failure — it reflects how policy design has, over time, shifted risk from the state onto individuals across higher education, housing, and pension provision, without a commensurate increase in incomes, stability, or institutional support.
- While these pressures are often considered in isolation, their interaction is central — student loan repayments constrain disposable income, housing costs limit the ability to save, and weaker savings outcomes increase long-term insecurity.
- Westminster has begun to engage with some of these pressures, particularly student finance — but the response has been shaped less by what matters most, and more by what is most visible.
- Policy has focused on specific technical failures — interest rates, repayment terms, or individual schemes — without addressing the underlying shift in risk and asset accumulation that is driving outcomes.
- Individually defensible decisions — freezing thresholds, maintaining existing housing support, or delaying reform — have accumulated into a settlement that is, in aggregate, less favourable for younger cohorts.
- Without an explicit intergenerational lens in policymaking, these trade-offs remain largely invisible — decisions continue to be assessed primarily for their short-term fiscal impact, rather than for how they shape outcomes across generations.
Student Finance
- In student finance, what was intended as a progressive system has in practice produced a “squeezed middle” — middle-earning graduates face persistently high marginal tax rates, make repayments for the majority of their working lives, and often see their balances rise rather than fall.
- What was meant to be a vehicle to finance higher education has, in part, morphed into a revenue-raising platform, with graduates picking up a tab they were never meant to carry.
Labour Markets
- The graduate premium has not disappeared — but it must be rethought. Its real value is now most visible in employment outcomes. Graduates enjoy an employment rate of 87.6 percent against 70.3 percent for non-graduates, with nearly three times as many in skilled work.
- The labour market picture for Gen Z extends beyond wages. Economic inactivity among 16-to-34-year-olds has surged by 57 percent in just four years— a trend that risks entrenching disadvantage for a generation already facing significant structural barriers.
Home Ownership
- Owning your own home remains fundamental to the British psychology — a cultural staple constant across generations — yet Gen Z will increasingly not enjoy this distinctly British milestone.
- Renting, once a transitional stage on the path to home ownership, has increasingly become the ceiling — delaying asset accumulation and narrowing economic mobility.
Long-Term Savings
- Gen Z face a pensions adequacy challenge – they must now become their own pension fund managers, navigating complex investment choices, precisely at the moment when their capacity to bear this risk is lowest — due to stagnant wages, high housing costs, and student loan repayments.
- The pension adequacy challenge is best understood in human terms. A typical 25-year-old graduate earning £34,000 would still need to find an additional £1,500–£2,570 (14-23% of take-home pay) a year just to achieve an adequate retirement. The squeeze is structural, not individual.
- A profound information gap has emerged — in the absence of formal guidance, many younger people are turning to social media for financial advice, giving rise to “finfluencers”: a largely unregulated advice ecosystem shaping decisions with long-term consequences.
Commenting on the report, Jamie Selig, Senior Political Consultant for the Economy and Financial Services, said:
“It’s no longer a given that our children and grandchildren will be better off than previous generations. If anything, the opposite is becoming true. Britain’s intergenerational compact is under serious strain. Gen Z are falling behind on the key building blocks of long-term financial security, undermining both aspiration and the promise of a better future.
Young people face a series of unique challenges that policymakers have yet to fully grapple with, and the consequences could be severe. Addressing this will require a rethink of how we make policy. Without putting young people at the heart of policymaking, trade-offs will continue to disadvantage younger cohorts and entrench these inequalities.”
