Mr Haldane says a surge in disease after the pandemic means people aged 35 to 50 are paying more taxes – Jason Alden/Bloomberg
Britain’s stressed “sandwich generation” is being forced to pay the bill for a rise in inactivity among older and younger workers, the Bank of England’s former chief economist has said.
Andy Haldane, now chief executive of the Royal Society of Arts, warned that the rise in long-term illness is placing even greater demands on people aged 35 to 50.
He said: “Right now we have pressure among the young and pressure among the old, and it’s putting pressure on those in between.
“The sandwich generation is footing the bill to support both young and old in financial and non-financial terms.”
The rise in disease following the pandemic means people aged 35 to 50 are paying more taxes and taking on more caregiving responsibilities, he said.
The UK is one of the only advanced economies where the share of people working or looking for a job is lower than before Covid.
Official figures published last week revealed that more than 2.6 million Britons are currently out of work due to long-term illness.
They now account for 29.6 percent of the population who are neither employed nor looking for a job, up from 25.2 percent before the pandemic.
Mr Haldane pointed to NHS data showing that one in five 17 to 24-year-olds reported having a mental health condition in 2022.
He said: “Our education system is failing a large section of our youth badly. And because this leads to poor prospects for jobs and lifestyle, it counterproductively contributes to those mental health problems.
He said Britain desperately needed more investment to avoid the “curse of short-termism” which was leading to “collapsing schools”, “congested roads” and overburdened hospitals.
Mr Haldane said he was particularly concerned about the lifelong impacts of young people being unable to start or remain in work due to mental health conditions.
He added: “We know that health and inactivity problems are very persistent. If you go into poor health, or if you go into unemployment inactivity at a young age, your chances of experiencing this problem throughout your life increase significantly.
The UK employment rate is still 1.1 percentage points below where it was before Covid, at 75.5 per cent.
According to the ONS, around 462,000 people dropped out of the labor force due to long-term illness from 2019 to 2022. This was 10 times more than the expected increase of 40,000 due to people living longer.
A surge in early retirement during the pandemic has also contributed to Britain’s rising economic inactivity, with the number of Britons aged 50 to 64 who are out of work rising by 300,000 to 3.5 million since pre-Covid levels. Is.
Jeremy Hunt, the chancellor, is struggling to get early retirees back into work and plug the gap in the job market.
Mr Haldane said Britain should re-evaluate how it views its aging population.
He said: “People living longer are living longer as long as they are healthy and active, which is a good thing.
“When you look at the skill system, our skill system is not adequately equipped to retrain a 50 to 60 year old person to re-enter the world of work. We must view aging as an opportunity, not an economic threat, and an opportunity that provides growth dividends, not an obstacle to growth.”
Separately, Mr Haldane warned that borrowers face a painful payback on higher borrowing costs, as interest rates are unlikely to return to their post-financial crisis lows of the past 15 years.
It comes ahead of the Bank of England meeting on Thursday, at which policymakers are expected to raise rates for the 15th consecutive time to 5.5 percent.
Mr Haldane said interest rates would likely stabilize around their 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 are seeing now is that interest rates are returning to somewhat closer to normal levels.
“I don’t think normal is like the 0pc, 1pc, 2pc that we’ve seen over the last few decades, but probably closer to the levels we’re seeing now.”
Mr Haldane, who was the bank’s chief economist from 2014 to 2021, said the likelihood of Britain falling into recession had increased in recent months.
He said a “large part” of the bank’s monetary tightening had still not reached people’s bank accounts.
Mr Haldane said: “For many people the savings pool, if it existed, has disappeared. So if they’re paying an extra £1,000 or £2,000 or £3,000 on their mortgage it’s going to have to come at a lower cost somewhere else.