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Could the Budget help turn Generation Z into generation debt?

November 27, 2025
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Ben ChuPolicy and analysis correspondent, BBC Verify

Getty Images A young woman in a supermarketGetty Images

Chancellor Rachel Reeves’ upcoming Budget is expected to justify tax increases as a vital measure to keep the UK’s national debt under control.

Some have argued keeping the national debt down protects the financial interests of younger people. That’s because if the country’s debt went up drastically, it is younger people who would have to foot the bill to pay for the interest on it. And it would be taken directly from their payslips through higher taxes.

Generation Z, or those born between 1997 and 2012, have been hit in the pocket over the past 15 years by benefit cuts, as well as being affected by the aftermath of the dramatic increase in university tuition fees in England from a cap of £3,375 to £9,000 in 2012 (with subsequent changes in Wales).

Meanwhile, the homeownership rate of those born since the 1990s is well below that of earlier generations, due to the relative difficulty they have faced in getting on the housing ladder.

However, most politicians, including the chancellor, are also committing to keep paying for the triple lock on the state pension, which guarantees it rises each year by the highest of average wages, inflation or 2.5%.

There’s growing concern that current tax and spending policies help pensioners but are unfair on younger generations, and that the triple lock in particular will push up public spending and the national debt in the long term.

So will this budget really help younger generations? Or could it help saddle them with higher taxes and more debt?

BBC Verify has been looking at the numbers.

Why is the national debt a concern?

The UK’s national debt currently stands at just under 100% of UK GDP, which is the value of all the goods and services produced by the economy in a year.

The government’s official forecaster, the Office for Budget Responsibility (OBR), has warned it could rise above 250% over the next 50 years unless taxes are raised or public spending is reduced.

Some economists doubt such a steep and sustained debt surge would actually materialise, arguing it would likely trigger a bond market crisis long before then and see UK government borrowing costs pushed to extreme levels by private investors, which would instead force a change in tax policy or spending.

Yet the OBR says the purpose of its long-term projection is to highlight that the UK’s public finances are currently on what it calls an “unsustainable” trajectory.

The biggest driver of rising long-term spending, and therefore the increase in the national debt according to the OBR, is our ageing population, which means the government needs to spend more money on the NHS, social care and the state pension each year.

The number of people over 65 is projected to rise from 13 million to 22 million over the next five decades. That would push up the old age dependency ratio – the proportion of older people over the age of 65 relative to people aged 16 to 64 – from around 30% today to almost 50% by 2070.

Today the state pension age is 66, but for people born after 1990 it’s likely to be pushed higher to keep people working longer and reduce the old-age dependancy ratio.

Even so, the national debt would still likely increase significantly from today’s level because of these old age spending pressures.

Do younger people lose out on public spending decisions?

Since 2010, government policy on benefits has tended to help older generations and to take money away from younger generations.

Over the past 15 years, the over 65s have received on average an extra £900 a year, while those under 65 have lost an average of £1,400 a year, according to calculations by the Resolution Foundation think tank.

The driving force behind this has been the value of the state pension increasing faster than average wages since 2010 because of the triple lock, alongside government cuts to working-age benefits, including housing benefits, unemployment benefits and universal credit.

The OBR projects that the triple lock will continue to push up state pension spending further in the coming decades.

If the state pension were only tied to increases in average wages then its share of GDP would only rise from 5% today to 6% in 2070, according to the OBR. But instead it projects the cost of the triple lock will push government spending on the state pension to nearly 8% over the next 45 years.

That might only be two extra percentage points, but it equates to around £60bn in today’s money, and it would be younger working age people who would have to pay for it through their taxes.

Which generations will benefit and lose from the Budget?

The impact on different age groups will depend on which taxes increase and which benefits are protected.

For instance, if high value homes were to face extra taxes, it would affect older people more as they tend to have greater property wealth.

If you look at earnings, pensioners still have to pay income tax but are no longer subject to employee National Insurance.

And younger people are deemed to have been hit harder by the increase in employer National Insurance contributions Rachel Reeves introduced in her first budget in October 2024, which appears to have slowed down job hiring rates.

All taxpayers have a shared interest in seeing the debt burden brought under control as a share of the size of the economy. Though one of the reasons the government borrows is to pay for investment in infrastructure such as roads and housing. Some economists warn that if ministers reduced that kind of spending and borrowing out of concern over the national debt it could prove counterproductive and ultimately damaging to younger people.

As for the triple lock, younger people could benefit from its continuation when they eventually retire themselves – and polling shows that 18-49 year olds are broadly in favour of keeping the policy.

Nevertheless, in the context of the past 15 years, many economists argue younger people also have an interest in seeing a rebalancing of the treatment of older and younger generations through the tax and benefit system.

Clarification 24 November: The reference to university tuition fees has been changed to make clear that the large increase happened in 2012 and to make clear the extent of this within the UK.



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