IMF report: Sorry children of the 1980s, you're screwed

By Victoria Craw

Kids born in the 1980s are definitely not clueless when it comes to career options, but their prospects are diminished, according to the IMF report. Photo / Supplied
Kids born in the 1980s are definitely not clueless when it comes to career options, but their prospects are diminished, according to the IMF report. Photo / Supplied

Sorry children of the 1980s, you're screwed - and this time it's official.

In addition to crippling house prices and a debt-laden future, young people have been dealt a blow by protectionist attitudes which could affect their economic prospects for years to come.

That's according to the IMF's latest World Economic Outlook which warns countries turning inward following a long period of economic stagnation could lead to lower global growth prospects in the short-term.

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It comes following a report that shows those born in the 1980s only have half the wealth those born a decade earlier did at the same age and are unlikely to catch up.

IMF chief economist Maurice Obstfeld said eight years after the financial crisis the world has moved "sideways" with developing countries picking up the slack while more advanced economies stagnate.

The organisation expects advanced economies will grow just 1.6 per cent in 2016 - much less than the 2.1 per cent last year and a downgrade from the 1.8 per cent predicted after the Brexit vote.

"It is vitally important to defend the prospects for increasing trade integration," he said. "Turning back the clock on trade can only deepen and prolong the world economy's current doldrums."

International Monetary Fund (IMF) Economic Counsellor Maurice Obstfeld speaks at a news conference during the World Bank/IMF Annual Meetings in Washington. Photo / AP
International Monetary Fund (IMF) Economic Counsellor Maurice Obstfeld speaks at a news conference during the World Bank/IMF Annual Meetings in Washington. Photo / AP

The economist also warned against "gathering political fallout" from low economic growth.

"The result in some richer countries has been a political movement that blames globalisation for all woes and seeks somehow to wall off the economy from global trends rather than engage cooperatively with foreign nations. Brexit is only one example of this tendency," he said.

The warning comes as countries around the world from the US to Europe lurch to the far-right in the midst of fears of immigration, terror and the consequences of unrestrained globalisation which many feel has not been to their benefit.

It's perhaps most pronounced in the UK where young people face a decade of uncertainty over their relationship with Europe following eight years of recovery from the 2008 recession. It's a pill made even more difficult to swallow by the fact that 75 per cent of those aged under 25 voted in favour of staying in the European Union.

Think tanks Demos head of citizenship Ralph Scott said the June referendum highlighted a huge identity gap in UK politics that had previously remained hidden and left many young people disillusioned with their economic, cultural and political prospects.

"Their economic prospects are much poorer," he said about the generation moving into the workforce as the government grapples with what Brexit means.

"We are going into a period of economic instability and even if we weren't doing that their prospects aren't very good.

"There is a risk that if they keep 'losing'....they'll feel even more estranged from formal politics and that's a real risk because we want people taking part to give the system legitimacy to make sure their views are heard."

The British pound has hit a 31-year low against the dollar. Photo / AP
The British pound has hit a 31-year low against the dollar. Photo / AP

This week the UK pound sunk to a 31-year-low against the Euro as it appears the government is moving towards a "hard" version of Brexit that favours border control over continued access to the single market. However the stockmarket soared amid speculation the weaker currency could be good for business.

Another report shows those born in the 1980s only have half the wealth those born a decade earlier did at the same age and are unlikely to catch up. That makes those in their 30s in the UK the first post-war generation not to earn more in early adulthood than those in previous decades.

The changes in the UK will also have a profound impact on young Kiwis wanting to live and work abroad who are likely to face tougher restrictions on visas and a business environment geared towards favouring local employees.

Home Secretary Amber Rudd said companies would be made to list foreign workers in an effort to shame British businesses into hiring locals. Students from outside the EU would also face crackdowns amid efforts to reduce net migration from around 300,000 to less than 100,000 per year.

Mr Scott said while it's "too early" to tell what exactly Brexit will mean for the UK, the sense of change and instability afoot already has "young people worried".

"I think there is a sentiment that traditional path ways, particularly for young people, are not as a reliable as [they] used to be."

"We don't know what's going to happen. It's economic, identity, political, all of those things are looking quite risky and treacherous. There's room for optimism but most people aren't seeing it."

- news.com.au

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