There are a number of myths and misconceptions surrounding British Millennials, particularly when it comes to their spending habits. While older members of this demographic are considered to be the most carefree and powerful spenders in the world, for example, the majority of Millennials actually exercise good and frugal financial habits.According to research conducted by the F&C Investment Trust and BMO Global Asset Management, two-in-three UK millennials also share traditional life goals, including buying a home, getting married and starting a family.
Despite this, Millennials continue to be maligned and compared unfavourably with their contemporaries across the globe. In this post, we’ll explore this further while asking whether British Millennials are in fact victims of circumstance.
Millennials in the UK and Norway – Is it a Fair Comparison?
In comparison with British Millennials, those in Norway are considered to be relatively well-off. In precise terms, young Norwegians have enjoyed a 13% hike in disposable household income in recent times, bucking a downward trend in other western economies and putting the UK in the shade.
However, this cannot be attributed to the behaviour of Millennials alone, with this surge in income largely down to the sustained levels of economic growth. Norway has seen the biggest increase in average earnings of any large high-income economy between 1980 and 2013, while its gas and oil sector has also thrived following significant discoveries in the North Sea. This provides a stark contrast with the UK economy, which continues to be undermined by the spectre of Brexit. While British exports have thrived as the value of the pound has faltered, the overall economy is already 2% smaller than it would have been without the vote to leave the European Union.
Investment into the UK is 4% lower, while consumption has fallen by 1.7% even before the Brexit process has been completed.
The Failure to Save – Why UK Millennials are Being Hamstrung
As we can see, UK Millennials are at a distinct disadvantage when compared with their Norwegian counterparts. We must also consider the impact of the macroeconomy in the UK, which is continuing to squeeze household income and make it impossible for Millennials to save.
The current rate of inflation in the UK is estimated at 2.5%, which is far beyond the Bank of England’s target of 2%. At the same time, earnings growth remains stagnant in the UK, and these factors have combined to create a rising cost of living and a paucity of disposable income. As a result of this, around 7.8 million British Millennials do not have the necessary savings or resources to achieve their traditional life goals.
Not only this, but they also lack the means to save in the future, with more than 50% unlikely to realise their objectives without significant assistance.
The Last Word
Ultimately, British Millennials live in strange times.While they have access to the type of flexible and unsecured loan products featured here, for example, they’re continually hamstrung by an adverse economic climate that makes it difficult to save their hard earned money. This can create an over-reliance on borrowing, while also casting Millennials in an unfair and inaccurate light.
This also makes comparisons with other Millennials pointless, as they lack the economic advantages and opportunities available to those who live in Norway. Things may also get worse before they improve, particularly of the UK exits the EU without a viable deal.
Sources: ft.com / telegraph.co.uk / bbc.com