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People aged between 18 and 34 will be hardest hit by the UK's slide into recession, a report claimed today.
The Chartered Insurance Institute (CII) and independent thinktank Reform claim outdated attitudes among financial services companies and over-regulation have left this age group without the tools to cope with an economic slowdown.
It said banks and financial services were out of touch, offering advice and products ill-suited to the way people live, while government-sponsored regulation had overprotected young people into a state of irresponsibility and pushed up the costs of financial advice.
Research found that around half of this age group - labelled Ipods (insecure, pressurised, over-taxed and debt-ridden) by the report's authors - had debts of up to £10,000, while a fifth owed more than that.
Almost a third had no savings and 60% said they would like to save more and borrow less.
However, a third said they did not understand financial products sufficiently, and only half said they felt confident when making financial decisions.
The report said that unless financial services can engage this generation, and the government dramatically reduce regulation, the UK faced the possibility of a whole generation living in post-retirement poverty.
It said 18-34-year-olds presented a paradox: while they were arguably better off than their parents and used financial products such as banking and credit at a younger age, they remained detached from pensions and investments.
As the credit crunch bites they will struggle to pay off debts or find lenders willing to help them on to the housing ladder. There could also be an increasing distrust of the government and banks, coupled with a lack of capability to do anything about it.
Lucy Parsons, senior economics researcher at Reform and one of the authors of the report, said: "We are living in 'broke Britain' not broken Britain, and my generation is suffering.
"We are potentially more capable of managing our money than previous generations, but we have been let down by the financial establishment and the government."
The CII's president, Trevor Matthews, said: "What is striking in this report is that Ipods possess the highest potential for appreciating the good value of advice and yet are not benefiting from it."
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