With debt of £221,000 per household, Generation Y will be the first generation to experience a lower quality of life than its parents

 
Emma Haslett
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The may be footloose and fancy-free now - but those born after 1980 may be the first generation to be worse off than their parents (Source: Getty)

The UK is a nation of secret debt addicts, and Generation Y (those born after 1980) is going to be left to pick up the tab, a study by the Centre for Policy Studies (CPS) warned today - meaning it will be the first generation to be worse off than its parents.

The think tank said with hidden costs pushing typical debt to £221,000 per household, the UK's net balance sheet liability, including "off the books" spending commitments such as the state pension liability, could be as much as £6tn - with the next generation left to foot the bill.

The report, entitled "Who Will Care for Generation Y?', found the UK's assets and liabilities grew 51 per cent in the five years to the end of March last year, to £1.85 trillion.

"At 111 per cent of GDP, this is equivalent to £70,000 per household - [and] if the state pension... is included the burden per household rises to £221,000," said CPS analyst Michael Johnson.

"Indeed, such is the scale that if the UK were accounted for as a public company, it would be bust."

The CPS warned that the government must be clear about unfunded, "hidden" spending commitments, such as state pension payments.

"The UK's Whole of Government Accounts (WGA) balance sheet should include a liability to represent future State Pension parments, based upon a realistic expectation of the future cash outflow," it said.

Other proposals included "inter-generational impact assessments" for unfunded spending commitments, an "Office of Fiscal Responsibility" to scrutinise value for money for all tax reliefs and exemptions, and a five year "sunset clause" for all tax reliefs.

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