It is the end of the exam season in British universities and schools, and students are emerging, blinking, into the sunshine. But the joy of finishing the last gruelling paper is turning to despair as they survey the job market. The prospects for our young people are bleak.

A report from the OECD has found an alarming surge in youth unemployment in the UK, which began even before the current downturn. In the mid-1990s, prospects were good for young jobseekers, but by 2007, the unemployment rate for 16 to 24-year-olds had soared to 14.4 per cent. The rise was fuelled by joblessness among the unskilled, named the Neets in Westminster — not in education, employment or training.

Skilled youngsters bucked the trend until the downturn began to bite. Figures released yesterday by the Higher Education Statistics Agency show that 16,835 graduates did not find a job last summer, up 6 per cent on the previous year. That figure is expected to soar this summer as employers scale back their recruitment.

This was a recession created in the City, which is having a disproportionate effect on the young: whether they are educated and mired in student debt, or low-skilled and burdened by low expectations and the acceptance of a benefits culture.

Within the statistics lie thousands of personal tragedies. Unemployment is dispiriting and depressing. It creates a vicious cycle of joblessness that is hard to break. The gaps on the CV, and the toll on ambition and confidence, can too easily turn a jobless few months into an unemployed year, and then into a wasted life.

But each of these personal tragedies add up to a much wider problem for society. When the long-awaited upturn comes, and the recruitment begins anew, employers will look to a new, fresher generation of graduates, bypassing their older brethren. A mini-generation of graduates will see their potential untapped and ambitions unfulfilled. The wasting of this talent will not aid any economic recovery, but slow its progression.

At the other end of the scale are the unskilled workers. Unemployment is particularly rife among young men. We face the prospect of a new wave of the unemployed, bored and disenfranchised dominating Britain’s deprived corners.

The Government’s response to this growing social issue, is the guarantee to find a job, education or training place for anyone under 25 who has been unemployed for one year. Ministers have appealed to businesses, social entrepreneurs and councils to create jobs, paid for by the Government from a £1 billion fund.

This idea could be a dismal flop. It could be a £1 billion fund to sponsor a tide of non-jobs, viewed with contempt by employers and coerced employees alike. If youngsters turn down one of these jobs they lose benefits. If the jobs were really needed, the market would have created them.

But if business engages with the government plans, the job guarantee could work well, by keeping youngsters in touch with the world of work and breaking the cycle of unemployment. It is in employers’ interests to sponsor a generation of skilled, motivated young workers. It is in their interest to think creatively about jobs and work experience, paid for by the Government, to motivate a generation that is in danger of being swallowed whole by the credit crunch.