THEY should be Britain’s gilded youth, enjoying opportunities to study, travel and embark on exciting careers in a way previous generations could only dream about. But instead they are the “Ipod” generation — “Insecure, Pressured, Over-taxed and Debt-ridden” — according to a study by Reform, the think tank, to be published this week.

“We have always worked on the assumption that each generation would be better off than its predecessors,” said Professor Nick Bosanquet of Imperial College London, one of its authors.

“But young people today have a lot more commitments and it is much more difficult for them to raise their incomes and generate wealth. This really is a very big issue for the country.”

According to the report, today’s generation lacks the confidence and ability to build on the economic foundations created by post-war baby boomers. Because they are indebted, they are also risk-averse; levels of entrepreneurship among Britain’s young are lower than in America, Australia, New Zealand and Ireland and have fallen over the past decade. Many opt for what appear to be safe jobs offering a good pension. Others have to take any job that is available to try to pay off their debts.

“The student loan is the biggest chain around my neck,” said Phil Grech, 22, from Cumbria, who has a degree in maths and meteorology from Reading University.

“I’m only doing a temporary job at the moment while I figure out what my long-term aspirations are and to pay the mounting bills. I haven’t really thought about the long term. People assume that when you leave university you can just walk into a job, but it’s no longer like that.”

Hayley Rathbone, 22, took a masters degree in applied criminology at Leicester University. She and her boyfriend have a combined debt of £15,000. “We have had to pay extortionate rent and the rising council tax doesn’t help,” she said.

“My boyfriend has taken a second job to attempt to balance the books. A holiday just isn’t going to happen, not in the next few years, and getting on the property ladder is unthinkable for at least three years.

“I’m working in the civil service but it’s only on a fixed term contract so there is no real security. I could be out on my ear in 12 months.”

The Reform study finds that the balance of tax and spending has tilted against Britain’s under-35s. The “welfare bargain” — of paying into the welfare state in the expectation of receiving benefits from it — has broken down, it claims.

“The next half century is likely to see an unprecedented transfer of wealth from the younger to the older generation in the form of health and pension spending,” it says.

The ageing population means that young people have to support an increasing number of pensioners, while extra public spending, particularly on the health service, also disproportionately benefits older people.

While previous generations enjoyed higher education funded by the taxpayer, young people today face university tuition fees and a declining “return” in the salary advantage they will get from their degrees.

Research quoted in the study suggests that the graduate “premium” (the extra lifetime earnings for those with degrees) is likely to average £140,000- £160,000, far short of the £400,000 assumed by the government when it introduced tuition fees. Some graduates, notably men with arts degrees, face a negligible return for their time at university and could do better leaving school at 18.

Young people also face dismal pensions, says the report, and have been locked out of the housing market by high prices and increases in stamp duty and inheritance tax. They pay 35% to 40% of their income in tax and get less in return for it than their predecessors.

Amro Karim, 24, is looking forward to completing his masters degree in automotive engineering at Brighton, but is not confident about the future. “I’ve got quite a large debt to pay back — around £15,000, not including credit cards and my overdraft,” he said.

“Even if I get a good wage, as soon as it gets comfortable I’ll be in the higher tax bracket. It’s a catch-22 situation. If I went back to my home town in Guernsey I’d only be taxed 20%, but there are no jobs in Guernsey.”

The Reform study concludes that the only way out is for the government to reduce public spending’s share of the economy, allowing the tax burden to be cut. It also calls for more “co-payment” in the NHS and other public services, so that those who use them bear a greater proportion of the cost.

The government’s 50% target for young people in higher education should be scrapped. it says, because it will flood the job market with graduates. Instead there should be a focus on the skills the economy needs.

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