Schrödinger’s immigrant, the old joke goes, is an immigrant capable of stealing your job while lounging around all day on benefits. By the same logic, Schrödinger’s millennial is a young-ish person who profligately wastes all their money on consumption rather than saving for the future like a sensible grown-up, while simultaneously killing industry after industry by not spraying money as their predecessors did. Actually, now I write it down, there’s no contradiction there at all, is there? Just so long as the thing said young-ish person is consuming is “rent”.
Anyway. On Monday, the Guardian published an article about changes to Britain’s mortgage market under the headline “Buying your first home just got (even) harder.” It’s a good piece, describing how Nationwide’s decision to triple the minimum mortgage deposit from 5 per cent to 15 per cent will push home ownership even further out of reach for millennials.
There are just seven words in it that got me twitching. At the end of a paragraph explaining that, no, not buying a coffee every day and using a cheap phone wouldn’t magically save the sort of sums required for a deposit, you’ll find these sentences. Emphasis mine.
“There’s no denying that would help towards their deposit, and is the right thing to do. But it doesn’t solve the problem.”
Which raises a question: if bit doesn’t solve the problem, then why is giving up on small joys “the right thing to do”? Perhaps because both Apple and Starbucks are awful, so giving them less money is a moral imperative. Or perhaps, to be fair, it’s because, as the article concludes, house prices may fall and 95 per cent mortgages will probably be back eventually: perhaps the grown-up thing to do is to start saving and wait it out.
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But I think you can detect another shade of meaning here – the idea, common to much commentary on the finances of both young people and the state, that saving is in itself a moral act. Consumption is wrong; restraint is right; and those who save their money for a rainy day are just better than those who don’t.
With half a second’s thought, it’s not obvious why this should be true. Saving is not good in and of itself: life is short, enjoy its pleasures while you can. Saving is only good as a means to an end – because it helps you to attain home ownership, and the security that comes with it, say; or because it makes possible a comfortable retirement.
But with the world as it is now, rather than as it was in earlier, more benign financial times, it’s not clear such things are possible. The average deposit among first-time buyers stood, in January, at over £46,000: even for a couple, that’s an eye-watering amount of money to have saved by, say, your mid-thirties. A decent income in retirement requires a pension pot well into six figures.
Those would be big numbers, even if real wages had continued growing in the way they did for most of the post-war era, but since 2008 they obviously haven’t. (Oh, and the economy is mired in the worst recession since 1706 thanks to Covid, but let’s not worry about that now.) On top of that, there’s nowhere to put your savings where you can get a decent rate of return because interest rates have been at record lows for a decade – except, that is, for property. Oh dear.
And then there’s the fact successive governments have, anyway, decided that a sane and healthy thing for around half of all young people to do is to begin the world with five-figure student debts, which takes a hefty bite out of their income and means that they don’t necessarily benefit from higher interest rates anyway.
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All this is without even addressing the fact that saving for the future only makes sense if there’s a future to save for. With the retirement age creeping up, decent pensions a thing of the past and the small matter of a global environmental catastrophe to contend with, it’s not clear that there is.
So if people feel saving is pointless, can you really blame them? Can you really say they’re wrong? It would take an impressive feat of optimism to imagine that the old age of people born in 1990 will look even slightly like that of those born in 1950. The world’s on fire. Why compound your misery by depriving yourself of coffee?
It would be better, yes, if people had savings, if only because we’ve just had a painful reminder that the economy can suddenly, unexpectedly, stop. But there are many reasons why they don’t – low wages, exploitative rents, crippling debts, an entirely rational belief that the future they are saving for is never going to come. The lack of moral fibre among young people is not on the list.
The lack of moral fibre of the generation who created this economy, and reap most of the benefits from it, might be.
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