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Youth unemployment crisis drains UK economy by £125bn annually
The UK is losing an estimated £125 billion each year due to young people aged 16 to 24 not being in employment, education, or training (Neet), according to a government-commissioned review led by former minister Alan Milburn. The report warns of a "lost generation" if systemic failures in education, health, and welfare systems are not addressed.
Record-high Neet figures revealed
Official data released on Thursday showed over one million young people in the UK are currently Neet-the highest level in more than 12 years. Milburn's review projects that one in six 16- to 24-year-olds could be out of work, education, or training by 2031 if trends continue.
"Opportunities for young people are shrinking, not growing," Milburn said, describing the situation as a "perfect storm" of challenges. The £125bn annual cost includes £38bn in lost economic potential, £63bn from long-term "scarring" effects on future employment, and additional losses in tax revenue and increased welfare spending.
Systemic failures blamed for crisis
The review argues that institutions designed to prepare young people for adulthood-including schools, healthcare, and welfare systems-are no longer fit for purpose. Milburn dismissed claims that young people are "work-shy" or to blame for the crisis, citing evidence that many submit hundreds of job applications monthly without response.
"The old contract in society was that effort would be rewarded-each generation would do better than the last. That contract has been broken for this generation."
Alan Milburn, former UK minister
The report highlights mental health struggles, including rising rates of anxiety and ADHD, as key barriers to employment. It also notes the impact of the Covid-19 pandemic, which disrupted social skills development for many young people.
Personal stories underscore struggles
Zaynah, 24, has applied for over 200 jobs since leaving college but has never received a response. "I feel restricted-I've never worked before, and my health issues make it harder," she said. She plans to volunteer to improve her CV.
Luke, 23, a product design graduate, applied for more than 400 positions but secured only one interview. "It's humiliating," he said. "You have the skills, but no opportunity to use them."
In contrast, Rocky, 23, found stability after joining Nando's as a waiter and is now an assistant manager. "I can tell my doubters I made it," he said.
Government and critics clash over solutions
Work and Pensions Secretary Pat McFadden acknowledged the "scale of the challenge" and outlined plans to create 500,000 opportunities for young people, including a Youth Jobs Grant, more apprenticeships, and subsidised employment.
However, shadow Work and Pensions Secretary Helen Whately criticised the government, claiming its policies had made it harder for young people to enter the workforce.
Employers cite rising costs as hiring barrier
The review found that the UK's Neet rate is three times higher than the Netherlands and twice that of Ireland. Employers in retail and hospitality-traditional entry points for young workers-report hiring challenges due to higher minimum wages and increased taxes, such as employer National Insurance contributions.
Lord Simon Wolfson, CEO of Next, said the retailer now receives 19 applications per shop vacancy, up from 10 two years ago. David Fox, founder of the Tampopo restaurant chain, cited inflation and rising employment costs as reasons for reduced hiring.
Solutions pending as crisis deepens
Milburn's review did not include policy recommendations, which will be published in a final report. The review also found no evidence linking migration to youth unemployment, instead attributing the crisis to broader systemic failures.
"This is a visceral fear among parents and grandparents-that this generation will be lost," Milburn told the BBC.
