Introduction: UK Faces Risk of ‘Lost Generation’ Without More Youth Jobs
Good morning, and welcome to our continuous coverage of business, financial markets, and the global economy.
Younger individuals in the UK are encountering a dual economic challenge: an increasing number are neither in education, employment, nor training, and they face growing difficulties entering the housing market.
Alan Milburn, former health secretary, is releasing a significant review addressing why so many young people in Britain are economically inactive. The report warns that within five years, one in six young people—approximately 1.25 million—could be outside education, employment, or training unless urgent measures are implemented.
Having examined this issue for several months, Milburn attributes the problem to systemic failures rather than the young people themselves.
“This is not a failure of young people. It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market.
“Instead, all too often it ends up putting young people on a path to a life not in jobs but on benefits. This should be the priority for the government. It should be the priority for all of us.”
To address the threat of a “lost generation,” Milburn advocates for increased incentives for employers to hire young people. This approach aims to help young individuals overcome the “Catch-22” where employers require work experience before offering employment.
The review also recommends reforming health and disability benefits, arguing that the current welfare system contributes to inactivity.
Another contributing factor is the decline of the traditional “Saturday job,” due to fewer entry-level positions and reduced opportunities in hospitality, leisure, and retail sectors, alongside a decrease in apprenticeship starts over the past decade.
New data released this morning will indicate whether the Neets (Not in Education, Employment, or Training) crisis is worsening, as explained by my colleague Richard Partington:
“Experts have warned of a crisis in youth jobs, with official figures due on Thursday expected to show the number of young people not in education, employment or training (Neet) is close to breaking through a million – the highest level for more than a decade.”
Milburn will caution that without immediate action, the proportion of young people classified as Neet could rise from one in eight to one in six within five years, affecting 1.25 million young lives.
Even those young people who overcome unemployment barriers face significant challenges in purchasing a home.
David Thomas, the outgoing chief executive of Barratt Redrow, has warned that first-time buyers are experiencing one of the most difficult periods for home purchases due to affordability issues (details follow below).
The Agenda
- 9.30am BST: Latest quarterly estimates for young people (aged 16 to 24 years) who are not in education, employment or training (Neet) in the UK
- 10.30am BST: Former Health Minister Alan Milburn to hold press conference on his review of the Neets crisis
- 1.30pm US PCE inflation report for April
New data from Zoopla this morning highlights the affordability challenges facing first-time buyers, showing:
- First-time buyers are targeting homes priced £10,000 higher than a year ago, with average prices rising 4.3% to £254,750 — nearly three times the rate of overall UK house price growth
- There are 6% fewer first-time buyers in the market compared to this time last year
Milburn Correct to Reject “Lazy Tropes” Around Youth Unemployment
Economists have welcomed Alan Milburn’s report on the UK’s Neets crisis ahead of its official release later today.
George Bangham, head of social policy at the New Economics Foundation (NEF), supports Milburn’s rejection of the notion that youth unemployment is the young people’s own fault, stating:
“Most young people want to work, but too few jobs are available to them in many local areas, as NEF research has shown. Job vacancies are at their lowest level in 12 years, outside of the pandemic lockdowns – and young people are struggling more than others to land the few jobs available.”
The Resolution Foundation think tank agrees with Milburn’s identification of key factors driving the UK’s Neet rate, including rising ill health, limited vocational education, a hands-off benefits system, and a weak labour market.
Lindsay Judge, research director at the Resolution Foundation, commented:
“It is encouraging to see how strongly the Milburn Review’s interim report recognises the gravity of the UK’s Neets crisis. Our ambition should be that the UK becomes one of Europe’s lowest Neet countries rather than one of its highest.
“The report has grasped the key drivers of the UK’s high Neet rate, and the steps needed to tackle these: more engaged employment support, early intervention on mental health, and a greater focus on further education.
“But there are real fiscal and structural challenges ahead. There is no single system currently in place to solve this crisis, so the Government will need to develop a new approach that spans government departments as well as regional and local authorities, plus find the funding to truly turn the Neets crisis around.”
First-Time Buyers Facing Toughest Challenge Since Financial Crisis
UK home ownership is becoming increasingly unattainable for young people, warns David Thomas, the outgoing chief executive of Barratt Redrow.
Thomas states that this period is among the most challenging for first-time buyers, comparable only to the aftermath of the 2008 financial crisis.
He attributes the difficulties to rising interest rates, student loan repayments, and stagnant real wages, which together make purchasing a home in 2026 more difficult, saying:
“Certainly it’s going to be close to where we were [after] the great financial crisis.
That was probably more to do with lending, but I think it’s very, very comparable for first-time buyers. We’re now facing challenges around affordability with no government support scheme in place.”
