Former chief economist Andy Haldane says 35 to 50-year-olds will bear the brunt of illness after the pandemic. Jason Alden/Bloomberg
Britain's «sandwich generation» is left to foot the bill for a surge in inactivity among older and younger workers, the Bank of England's former chief economist said.
Andy Haldane, who is now chief executive of the Royal Society of Arts, warned that the sharp rise in long-term illnesses is placing ever greater demands on people aged 35 to 50.
He said: “Right now we have there is pressure among the young and pressure among the old, and that puts pressure on those in the middle.
“The Sandwich Generation is shouldering the costs of supporting both young and old, financially and intangibly. from a financial point of view.»
The post-pandemic rise in infection rates means people aged 35 to 50 are having to pay higher taxes and take on many more caring responsibilities, he said.
The UK is one of the few advanced economies where The proportion of people working or looking for work remains lower than before Covid.
Official figures published last week showed that more than 2.6 million Britons are currently unemployed. due to long-term illness.
0609 economically inactive people
They now make up 29.6% of the population who are not working or looking for work, compared to 25.2% before the pandemic.
Mr Haldane pointed to NHS data which showed one in five 17 to 24-year-olds reported a mental health condition in 2022.
He said: “Our system education is failing a very large portion of our youth. People. And because it creates poor employment and lifestyle prospects, it reactively contributes to mental health problems.”
He added that the UK desperately needs more investment to avoid the «taint of short-termism». it had led to «collapsed schools», «congested roads» and overwhelmed hospitals.
Mr Haldane said he was particularly concerned about the impact on the lives of young people who were unable to enter or remain in work due to mental health problems. diseases.
He added: “We know that problems with health and inactivity are very persistent. If your health declines or you become unemployed at an early age, it will significantly increase the likelihood that you will experience this problem throughout your life.»
UK employment rate remains at 1.1 percentage points below where it was before Covid — 75.5%.
1407 Mental health problems lead to long-term illness
Between 2019 and 2022, around 462,000 people left the workforce due to long-term illnesses, according to the ONS. This is more than 10 times the projected increase of 40,000 as people live longer.
A sharp rise in early retirement during the pandemic has also contributed to the UK's growing economic inactivity, with the number of Britons aged 50 to 64 The number of unemployed people has risen by 300,000 to 3.5 million on pre-Covid levels.
Jeremy Hunt, the chancellor, is fighting to get early retirees back into work and plug gaps in the labor market.< /p>
Mr Haldane added that the UK should reconsider how it deals with its aging population. He said: “People live longer if they are healthy and active, and that is a good thing.”
“When you look at the skills system, our skills system is simply ill-equipped to retrain people in their 50s and 60s so they can reskill and re-enter the world of work. We must view aging as an opportunity rather than a threat to the economy, and as a factor that pays growth dividends rather than inhibits growth.”
Bank of England interest rate forecast 1509
In addition, Mr Haldane warned that borrowers face a painful return to higher borrowing costs as interest rates are unlikely to fall to the post-crisis lows of the last 15 years.
This comes ahead of a Bank of England meeting on Thursday, at which policymakers are expected to raise rates for the 15th time in a row to 5.5%.
Mr Haldane said interest rates were likely to stabilize at current levels in the long term, meaning borrowers were unlikely to see the cheap mortgage deals of the last 15 years again.
He said: “ What we're seeing now is that interest rates are returning to something that's closer to a sort of normal level.
“I don't think the normal level is the 0%, 1%, 2% that we've seen over the last couple of decades, but probably somewhere closer to the levels we see now.
Mr Haldane, who was the Bank's chief economist from 2014 to 2021, said the likelihood of the UK falling into recession had increased in recent months.
'The lion's share » He added that the Bank's tightening of monetary policy had not yet reached people's bank accounts.
Mr Haldane said: «For too many people, a pool of savings, if there was one, has evaporated. So if they pay an extra £1,000, or £2,000, or £3,000 on their mortgage, that must be due to lower costs elsewhere.»
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